Agenda packet — Ontario City Council, July 16, 2024 (part 13 of 14)

Nothing contained in the Indenture shall permit or require the Trustee or the Authority to accelerate payments due under the Installment Purchase Agreement if the City, which is a party to such Installment Purchase Agreement, is not in default of its obligation thereunder.

Any such declaration is subject to the condition that if, at any time after such declaration, but before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the Authority or the City shall deposit with the Trustee an amount that is sufficient to pay all the principal of and installments of interest on the Bonds the payment of which is overdue, with interest on such overdue principal at the rate borne by the respective Bonds to the extent permitted by law, and the reasonable charges and expenses of the Trustee, and any and all other Events of Default known to the Trustee (other than in the payment of principal of and interest on the Bonds that is due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case the Trustee shall on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences and waive such Event of Default; but no such rescission and annulment shall extend to or affect any subsequent Event of Default or impair or exhaust any right or power consequent thereon.

Application of Authority Revenues and Other Funds After Default. If an Event of Default shall occur and be continuing, all Authority Revenues then held or thereafter received by the Trustee and any other funds then held or thereafter received by the Trustee under any of the provisions of the Indenture (other than amounts held in the Rebate Fund) shall be applied by the Trustee as follows and in the following order:
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(a) To the payment of any expenses that are necessary in the opinion of the Trustee to protect the interests of the Owners of the Bonds and to the payment of reasonable fees and expenses of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under the Indenture; and (b) To the payment of the principal of and interest then due on the Bonds (upon presentation of the Bonds to be paid, and stamping or otherwise noting thereon of the payment if only partially paid, or surrender thereof if fully paid) in accordance with the provisions of the Indenture, in the following order of priority:

First: To the payment to the persons that are entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the amount that is available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the persons entitled thereto, without any discrimination or preference; and Second: To the payment to the persons entitled thereto of the unpaid principal of any Bonds which shall have become due, whether at maturity or by acceleration or redemption, with interest on the overdue principal at the rate of eight percent (8%) per annum, and, if the amount that is available shall not be sufficient to pay in full all the Bonds, together with such interest, then to the payment thereof ratably, according to the amounts of principal due on such date to the persons entitled thereto, without any discrimination or preference; and Third: If there shall exist any remainder after the foregoing payments, such remainder shall be paid to the Authority.

Trustee to Represent Bond Owners. The Trustee is hereby irrevocably appointed (and the successive respective Owners of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney in fact of the Owners of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Owners under the provisions of the Bonds or the Indenture and applicable provisions of any other law. Upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Bond Owners, the Trustee in its discretion may, and upon the written request of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, shall proceed to protect or enforce its rights or the rights of such Owners by such appropriate action, suit, mandamus or other proceedings as it shall deem most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee or in such Owners under the Bonds or the Indenture or any other law; and upon instituting such proceeding, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the Authority Revenues and other assets pledged under the Indenture, pending such proceedings. All rights of action under the Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of all the Owners of such Bonds, subject to the provisions of the Indenture.
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Bond Owners’ Direction of Proceedings. Anything in the Indenture to the contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing that are executed and delivered to the Trustee, and upon indemnification of the Trustee to its reasonable satisfaction, to direct the method of conduct in all remedial proceedings taken by the Trustee hereunder, provided that such direction shall not be otherwise than in accordance with law and the provisions of the Indenture, and that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Bond Owners who are not parties to such direction.

Suit by Owners. No Owner of any Bonds shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under the Indenture, the Installment Purchase Agreement, the JPA Agreement or any other applicable law with respect to such Bonds, unless: (a) such Owners shall have given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) such Owner or Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (d) the Trustee shall have failed to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee; and (e) no direction which is inconsistent with such written request shall have been given to the Trustee during such sixty (60) day period by the Owners of a majority in aggregate principal amount of the Bonds then Outstanding.

Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy hereunder or under law; it being understood and intended that no one or more Owners of Bonds shall have any right in any manner whatever by their action to affect, disturb or prejudice the security of the Indenture or the rights of any other Owners of Bonds, or to enforce any right under the Bonds, the Indenture, the Installment Purchase Agreement, the JPA Agreement or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Owners of the Outstanding Bonds, subject to the provisions of the Indenture.

Absolute Obligation of the Authority. Nothing in this Section or in any other provision of the Indenture or in the Bonds shall affect or impair the obligation of the Authority, which is absolute and unconditional, to pay the principal of and interest on the Bonds to the respective Owners of the Bonds at their respective dates of maturity, or upon call for redemption, as herein provided, but only out of the Authority Revenues and other assets herein pledged therefor, or affect or impair the right of such Owners, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds.

Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Owners of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
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No Waiver of Default. No delay or omission of the Trustee or of any Owner of the Bonds to exercise any right or power arising upon the occurrence of any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein.

ARTICLE VIII

THE TRUSTEE
Duties, Immunities and Liabilities of Trustee.
(a) The Trustee shall, prior to an Event of Default, and after the curing of all Events of Default which may have occurred, perform such duties and only such duties as are expressly and specifically set forth in the Indenture, and no implied covenants or duties shall be read into the Indenture against the Trustee. The Trustee shall, during the existence of any Event of Default (which has not been cured), exercise such of the rights and powers vested in it by the Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) The Authority may remove the Trustee upon thirty (30) days prior notice, unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing) or if at any time the Trustee shall cease to be eligible in accordance with subsection (e) of this Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of such removal to the Trustee. The Authority shall promptly appoint a successor Trustee by an instrument in writing.
(c) The Trustee may at any time resign by giving written notice of such resignation to the Authority and by giving the Bond Owners notice of such resignation by mail at the addresses shown on the Registration Books. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee by an instrument in writing. (d) No removal, resignation or termination of the Trustee shall become effective until a successor meeting the requirements below shall be qualified and appointed and shall have accepted its appointment. If no successor Trustee shall have been appointed and have accepted appointment within forty-five (45) days of giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Bond Owner (on behalf of himself and all other Bond Owners) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee that is appointed under the Indenture shall signify its acceptance of such appointment by executing and delivering to the Authority and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Request of the Authority or the request of the successor 3076
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Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all of the right, title and interest of such predecessor Trustee in and to any property held by it under the Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property that is subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, the Authority shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the Authority shall mail or cause the successor trustee to mail a notice of the succession of such Trustee to the trusts hereunder to each rating agency which is then rating the Bonds and to the Bond Owners at the addresses shown on the Registration Books. If the Authority fails to mail such notice within fifteen (15) days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Authority. (e) Any Trustee that is appointed under the provisions of this Section in succession to the Trustee shall be a national banking association that is supervised by the Office of the Comptroller of the Currency and has at least $250 million of assets, a state-chartered commercial bank that is a member of the Federal Reserve System and has at least $1 billion of assets. If such national banking association or bank publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority that is referred to above, then for the purpose of this subsection, the combined capital and surplus of such national banking association or bank shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (e), the Trustee shall resign immediately in the manner and with the effect specified in this Section.

Merger or Consolidation. Any trust company, banking association or bank into which the Trustee may be merged or converted or with which it may be consolidated, any trust company, banking association or bank resulting from any merger, conversion or consolidation to which it shall be a party or any trust company, banking association or bank to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such trust company, banking association or bank shall be eligible under Section 8.01(e), shall be the successor to such Trustee, without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.

Liability of Trustee.
(a) The recitals of facts herein and in the Bonds shall be taken as statements of the Authority, and the Trustee shall not assume responsibility for the correctness of the same, or make any representations as to the validity or sufficiency of the Indenture, the Bonds or the Installment Purchase Agreement, nor shall the Trustee incur any responsibility in respect thereof, other than as expressly stated herein in connection with the respective duties or obligations herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee may become the Owner of Bonds with the same rights it would have if it were not Trustee, and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any 3077
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committee formed to protect the rights of Bond Owners, whether or not such committee shall represent the Owners of a majority in principal amount of the Bonds then Outstanding. (b) The Trustee shall not be liable for any error of judgment that is made in good faith by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
(c) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of not less than a majority (or such other percentage provided for herein) in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under the Indenture.
(d) The Trustee shall not be liable for any action taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by the Indenture.
(e) The Trustee shall not be deemed to have knowledge of any default or Event of Default hereunder or under the Installment Purchase Agreement or any other event which, with the passage of time, the giving of notice, or both, would constitute an Event of Default hereunder or under the Installment Purchase Agreement unless and until a Responsible Officer of the Trustee shall have actual knowledge of such event or the Trustee shall have been notified in writing, in accordance with Section 11.07, of such event by the Authority or the Owners of not less than twenty-five percent (25%) of the Bonds then Outstanding. Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or inquire as to the performance or observance by the Authority or the City of any of the terms, conditions, covenants or agreements herein, or under the Installment Purchase Agreement, of any of the documents executed in connection with the Bonds or as to the existence of an Event of Default thereunder or an event which would, with the giving of notice, the passage of time, or both, constitute an Event of Default thereunder. The Trustee shall not be responsible for the validity, effectiveness or priority of any collateral that is given to or held by it. (f) No provision of the Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties hereunder, or in the exercise of any of its rights or powers.
(g) The Trustee shall be under no obligation to exercise any of the rights or powers that are vested in it by the Indenture at the request or direction of Owners pursuant to the Indenture unless such Owners shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. No permissive power, right or remedy that is conferred upon the Trustee hereunder shall be construed to impose a duty to exercise such power, right or remedy. (h) Whether or not herein expressly so provided, every provision of the Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article VIII.
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(i) The Trustee shall have no responsibility or liability with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds. (j) The immunities that are extended to the Trustee also extend to its directors, officers, employees and agents.
(k) The Trustee may execute any of the trusts or powers of the Indenture and perform any of its duties through attorneys, agents and receivers and shall not be answerable for the conduct of the same if appointed by it with reasonable care. (l) The Trustee shall not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of enforced delay in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, acts of God or of the public enemy or terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosions, mob violence, riots, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to the 2024 Project, malicious mischief, condemnation and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Trustee.
(m) The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to the Indenture and delivered using Electronic Means (“Electronic Means”), which shall mean the following communications methods:
e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder); provided, however, that the Authority shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the Authority whenever a person is to be added or deleted from the listing. If the Authority elects to give the Trustee Instructions using Electronic Means and the Trustee acts upon such Instructions, the Trustee’s understanding of such Instructions shall be deemed controlling. The Authority understands and agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Authority shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the Authority and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Authority. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Instructions notwithstanding the fact that such directions conflict or are inconsistent with a subsequent written instruction. The Authority agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure 3079
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methods of transmitting Instructions than the method(s) selected by the Authority; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedure.
(n) The Trustee shall not be concerned with or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions hereof.
(o) The permissive right of the Trustee to do things enumerated herein shall not be construed as a duty and it shall not be answerable for other than its negligence or willful misconduct.

Right to Rely on Documents. The Trustee shall be protected in acting upon any notice, resolution, requisition, request, consent, order, certificate, report, opinion, notes, direction, facsimile transmission, electronic mail or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, who may be counsel of or to the Authority, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.

The Trustee may treat the Owners of the Bonds appearing in the Trustee’s Registration Books as the absolute owners of the Bonds for all purposes and the Trustee shall not be affected by any notice to the contrary.

Whenever in the administration of the trusts imposed upon it by the Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof is specifically prescribed herein) may be deemed to be conclusively proved and established by a Certificate, Request or Requisition of the Authority, and such Certificate, Request or Requisition shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of the Indenture in reliance upon such Certificate, Request or Requisition, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable.

Preservation and Inspection of Documents. All documents that are received by the Trustee under the provisions of the Indenture shall be retained in its possession and shall be subject at all reasonable times to the inspection of the Authority, the City and any Bond Owner, and their agents and representatives duly authorized in writing, at reasonable hours and under reasonable conditions.

Compensation and Indemnification. The Authority shall pay to the Trustee from time to time reasonable compensation for all services that are rendered under the Indenture, and also all reasonable expenses, charges, legal and consulting fees and other disbursements and those of their attorneys, agents and employees, incurred in and about the performance of their powers and duties under the Indenture.
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The Authority shall indemnify, defend and hold harmless the Trustee, its officers, employees, directors and agents from and against any loss, costs, claims, liability or expense (including fees and expenses of its attorneys and advisors) incurred without negligence or bad faith on its part, arising out of or in connection with the execution of the Indenture, acceptance or administration of this trust, including costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers hereunder. The rights of the Trustee and the obligations of the Authority under this Section 8.06 shall survive removal or resignation of the Trustee hereunder or the discharge of the Bonds and the Indenture.

ARTICLE IX

MODIFICATION OR AMENDMENT OF THE INDENTURE
Amendments Permitted.
(a) The Indenture and the rights and obligations of the Authority, the Owners of the Bonds and the Trustee may be modified or amended from time to time and at any time by an indenture or indentures supplemental thereto, which the Authority and the Trustee may enter into when the prior written consents of the Owners of a majority in aggregate principal amount of all Bonds then Outstanding, exclusive of Bonds that are disqualified as provided in Section 11.09, have been filed with the Trustee. No such modification or amendment may: (1) extend the fixed maturity of any Bonds, or reduce the amount of principal thereof or premium (if any) thereon, or extend the time of payment, or change the rate of interest or the method of computing the rate of interest thereon, or extend the time of payment of interest thereon, without the consent of the Owner of each Bond so affected; or (2) reduce the aforesaid percentage of Bonds the consent of the Owners of which is required to affect any such modification or amendment, or permit the creation of any lien on the Authority Revenues and other assets pledged under the Indenture prior to or on a parity with the lien that is created by the Indenture except as permitted herein, or deprive the Owners of the Bonds of the lien created by the Indenture on such Authority Revenues and other assets except as permitted herein, without the consent of the Owners of all of the Bonds then Outstanding. It shall not be necessary for the consent of the Bond Owners to approve the particular form of any Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Authority and the Trustee of any Supplemental Indenture pursuant to this subsection (a), the Trustee shall mail a notice, setting forth in general terms the substance of such Supplemental Indenture, to each Rating Agency and the Owners of the Bonds at the respective addresses shown on the Registration Books. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture. (b) The Indenture and the rights and obligations of the Authority, the Trustee and the Owners of the Bonds may also be modified or amended from time to time and at any time by a Supplemental Indenture, which the Authority and the Trustee may enter into without the consent of any Bond Owners, if the Trustee shall receive an opinion of Bond Counsel to the effect that the provisions of such Supplemental Indenture shall not materially adversely affect the interests of the Owners of the Outstanding Bonds, including, without limitation, for any one or more of the following purposes:
(1) to add to the covenants and agreements of the Authority contained in the Indenture other covenants and agreements thereafter to be observed, to pledge or assign 3081
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additional security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Authority;
(2) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in the Indenture, or in regard to matters or questions arising under the Indenture, as the Authority may deem necessary or desirable;
(3) to modify, amend or supplement the Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereunder in effect, and to add such other terms conditions and provisions as may be permitted by said act or similar federal statute; and
(4) to modify, amend or supplement the Indenture in such manner as to cause interest on the Bonds to remain excludable from gross income under the Code. (c) The Trustee may in its discretion, but shall not be obligated to, enter into any such Supplemental Indenture that is authorized by subsections (a) or (b) of this Section which materially adversely affects the Trustee’s own rights, duties or immunities under the Indenture or otherwise.
(d) Prior to the Trustee entering into any Supplemental Indenture hereunder, there shall be delivered to the Trustee an opinion of Bond Counsel stating, in substance, that such Supplemental Indenture has been adopted in compliance with the requirements of the Indenture and that the adoption of such Supplemental Indenture will not, in and of itself, adversely affect the exclusion of interest on the Bonds from federal income taxation and the exclusion of interest on the Bonds from state income taxation.

Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture pursuant to this Article, the Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under the Indenture of the Authority, the Trustee and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced thereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of the Indenture for any and all purposes.

Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after the execution of any Supplemental Indenture pursuant to this Article may, and if the Trustee so determines shall, bear a notation by endorsement or otherwise in form approved by the Authority as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand on the Owner of any Bonds Outstanding at the time of such execution and presentation of his or her Bonds for the purpose at the Office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, a suitable notation shall be made on such Bonds.

If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the Authority, to any modification or amendment that is contained in such Supplemental Indenture, shall be prepared and executed by the Authority and authenticated by the Trustee, and upon demand on the Owners of any Bonds then Outstanding shall be exchanged at the Office of the Trustee, without cost to any Bond Owner, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in equal aggregate principal amount of the same maturity. 3082
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Amendment of Particular Bonds. The provisions of this Article shall not prevent any Bond Owner from accepting any amendment as to the particular Bonds held by such Bond Owner.

ARTICLE X

DEFEASANCE
Discharge of Indenture. The Bonds may be paid by the Authority in any of the following ways, provided that the Authority also pays or causes to be paid any other sums payable hereunder by the Authority:
(a) by paying or causing to be paid the principal of and interest and redemption premiums (if any) on the Bonds, as and when the same become due and payable; (b) by depositing with the Trustee, in trust, at or before maturity, money or securities in the necessary amount (as provided in Section 10.03) to pay or redeem all Bonds then Outstanding; or
(c) by delivering to the Trustee, for cancellation by it, all of the Bonds then Outstanding.

If the Authority shall also pay or cause to be paid all other sums that are payable hereunder by the Authority, then and in that case, at the election of the Authority (as evidenced by a Certificate of the Authority, filed with the Trustee, signifying the intention of the Authority to discharge all such indebtedness and the Indenture), and notwithstanding that any Bonds shall not have been surrendered for payment, the Indenture and the pledge of Authority Revenues and other assets under the Indenture and all covenants, agreements and other obligations of the Authority under the Indenture shall cease, terminate, become void and be completely discharged and satisfied. In such event, upon the Request of the Authority, the Trustee shall execute and deliver to the Authority all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over, transfer, assign or deliver all moneys or securities or other property held by it pursuant to the Indenture which are not required for the payment or redemption of Bonds not theretofore surrendered for such payment or redemption to the Authority.

Discharge of Liability on Bonds. Upon the deposit with the Trustee, in trust, at or before maturity, of money or securities in the necessary amount (as provided in Section 10.03) to pay or redeem any Outstanding Bonds (whether upon or prior to the maturity or the redemption date of such Bonds), provided that, if such Outstanding Bonds are to be redeemed prior to maturity, notice of such redemption shall have been given as provided in Article IV or provisions satisfactory to the Trustee shall have been made for the giving of such notice, then all liability of the Authority in respect of such Bonds shall cease, terminate and be completely discharged, and the Owners thereof shall thereafter be entitled only to payment out of such money or securities that are deposited with the Trustee as aforesaid for their payment, subject however, to the provisions of Section 10.04.

The Authority may at any time surrender to the Trustee for cancellation by it any Bonds that were previously issued and delivered, which the Authority may have acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired.
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Deposit of Money or Securities with Trustee. Whenever in the Indenture it is provided or permitted that there be deposited with or held in trust by the Trustee money or securities in the necessary amount to pay or redeem any Bonds, the money or securities so to be deposited or held may include money or securities held by the Trustee in the funds and accounts established pursuant to the Indenture and shall be:
(a) lawful money of the United States of America in an amount that is equal to the principal amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption shall have been given as provided in Article IV or provisions satisfactory to the Trustee shall have been made for the giving of such notice, the amount to be deposited or held shall be the principal amount of such Bonds and all unpaid interest and premium, if any, thereon to the redemption date; or
(b) Federal Securities the principal of and interest on which when due will, in the written opinion of an Independent Certified Public Accountant filed with the Authority and the Trustee, provide money that is sufficient to pay the principal of and all unpaid interest to maturity, or to the redemption date (with premium, if any), as the case may be, on the Bonds to be paid or redeemed, as such principal, interest and premium, if any, become due, provided that in the case of Bonds which are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in Article IV or provision satisfactory to the Trustee shall have been made for the giving of such notice;
provided, in each case, that: (i) the Trustee shall have been irrevocably instructed (by the terms of the Indenture or by Request of the Authority) to apply such money to the payment of such principal, interest and premium, if any, with respect to such Bonds; and (ii) the Authority shall have delivered to the Trustee an opinion of Bond Counsel addressed to the Authority and the Trustee to the effect that such Bonds have been discharged in accordance with the Indenture (which opinion may rely upon and assume the accuracy of the Independent Certified Public Accountant’s opinion referred to above).

Payment of Bonds After Discharge of Indenture. Notwithstanding any provisions of the Indenture, any moneys which are held by the Trustee in trust for the payment of the principal of, or interest on, any Bonds and which remain unclaimed for two (2) years after the principal of all of the Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as provided in the Indenture), if such moneys were so held at such date, or two (2) years after the date of deposit of such moneys if deposited after said date when all of the Bonds became due and payable, shall be repaid (without liability for interest) to the Authority free from the trusts created by the Indenture upon receipt of an indemnification agreement that is acceptable to the Authority and the Trustee indemnifying the Trustee with respect to claims of Owners of Bonds which have not yet been paid, and all liability of the Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of such moneys to the Authority as aforesaid, the Trustee shall at the written direction of the Authority (at the cost of the Authority) first mail to the Owners of Bonds which have not yet been paid, at the addresses shown on the Registration Books, a notice, in such form as may be deemed appropriate by the Trustee with respect to the Bonds so payable and not presented and with respect to the provisions relating to the repayment to the Authority of the moneys held for the payment thereof. 3084
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ARTICLE XI

MISCELLANEOUS
Liability of Authority Limited to Authority Revenues. Notwithstanding anything in the Indenture or the Bonds, the Authority shall not be required to advance any moneys derived from any source other than the Authority Revenues and other moneys pledged under the Indenture for any of the purposes of the Indenture, whether for the payment of the principal of or interest on the Bonds or for any other purpose of the Indenture. Nevertheless, the Authority may, but shall not be required to, advance for any of the purposes hereof any funds of the Authority which may be made available to it for such purposes.

The Bonds are not a debt of the members of the Authority, the State or any of its political subdivisions (other than the Authority) and neither the members of the Authority, said State nor any of its political subdivisions (other than the Authority) is liable thereon. The City shall have no liability or obligation herein except with respect to Series 2024 Installment Payments payable under the Installment Purchase Agreement.

Successor Is Deemed Included in All References to Predecessor. Whenever in the Indenture either the Authority or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all covenants and agreements in the Indenture by or on behalf of the Authority or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.

Limitation of Rights to Parties and Bond Owners. Nothing in the Indenture or in the Bonds, express or implied, is intended or shall be construed to give to any person other than the Authority, the Trustee, the City and the Owners of the Bonds, any legal or equitable right, remedy or claim under or in respect of the Indenture or any covenant, condition or provision therein or herein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Authority, the Trustee, the City and the Owners of the Bonds.

Waiver of Notice; Requirement of Mailed Notice. Whenever in the Indenture the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person who is entitled to receive such notice, and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Whenever in the Indenture any notice shall be required to be given by mail, such requirement shall be satisfied by the deposit of such notice in the United States mail, postage prepaid, by first class mail.

Destruction of Bonds. Whenever in the Indenture provision is made for the cancellation by the Trustee and the delivery to the Authority of any Bonds, the Trustee shall destroy such Bonds as may be allowed by law and upon request deliver a certificate of such destruction to the Authority.

Severability of Invalid Provisions. If any one or more of the provisions contained in the Indenture or in the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in the Indenture and such invalidity, illegality or unenforceability shall not affect any other provision of the Indenture, and the Indenture shall be construed as if such 3085
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invalid or illegal or unenforceable provision had never been contained herein. The Authority hereby declares that it would have entered into the Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of the Indenture may be held illegal, invalid or unenforceable.

Notices. Any notice to or demand upon the Authority or the Trustee shall be deemed to have been sufficiently given or served for all purposes by being sent by facsimile or by being deposited, first class mail, postage prepaid, in a post office box, to the Authority at 303 East B Street, Ontario, California 91764, Attention: Executive Director (or such other address as may have been filed in writing by the Authority with the Trustee), or to the Trustee at its Office by first class mail. Notwithstanding the foregoing provisions of this Section 11.07, the Trustee shall not be deemed to have received, and shall not be liable for failing to act upon the contents of, any notice unless and until the Trustee actually receives such notice.

Evidence of Rights of Bond Owners. Any request, consent or other instrument that is required or permitted by the Indenture to be signed and executed by Bond Owners may be in any number of concurrent instruments of substantially similar tenor and shall be signed or executed by such Bond Owners in person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, or of the holding by any person of Bonds transferable by delivery, shall be sufficient for any purpose of the Indenture and shall be conclusive in favor of the Trustee and the Authority if made in the manner provided in this Section.

The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the person signing such request, consent or other instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer.

The Ownership of Bonds shall be proved by the Registration Books. Any request, consent, or other instrument or writing of the Owner of any Bond shall bind every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Authority in accordance therewith or reliance thereon.

Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under the Indenture, Bonds which are actually known by the Trustee to be owned or held by or for the account of the Authority, or by any other obligor on the Bonds, or by any person that is directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or any other obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Bonds and that the pledgee is not a person that is directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or any other obligor on the Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the 3086
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Trustee. Upon request, the Authority shall certify to the Trustee those Bonds that are disqualified pursuant to this Section 11.09 and the Trustee may conclusively rely on such certificate.

Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest, principal or premium due on any date with respect to particular Bonds (or portions of Bonds in the case of registered Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owners of the Bonds entitled thereto, subject, however, to the provisions of Section 10.04 hereof, but without any liability for interest thereon.

Funds and Accounts. Any fund or account that is required by the Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with corporate trust industry standards to the extent practicable, and with due regard for the requirements of Section 6.05 and for the protection of the security of the Bonds and the rights of every Owner thereof.

Waiver of Personal Liability. No member, officer, agent, employee, consultant or attorney of the Authority or the City shall be individually or personally liable for the payment of the principal of or premium or interest on the Bonds or subject to any personal liability or accountability by reason of the issuance thereof; but nothing herein contained shall relieve any such member, officer, agent, employee, consultant or attorney from the performance of any official duty provided by law or by the Indenture.

Execution in Several Counterparts. The Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the Authority and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument.

CUSIP Numbers. Neither the Trustee nor the Authority shall be liable for any defect or inaccuracy in the CUSIP number that appears on any Bond or in any redemption notice.

The Trustee may, in its discretion, include in any redemption notice a statement to the effect that the CUSIP numbers on the Bonds have been assigned by an independent service and are included in such notice solely for the convenience of the Bondholders and that neither the Authority nor the Trustee shall be liable for any inaccuracies in such numbers.

Choice of Law. THE INDENTURE SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF CALIFORNIA.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the Authority has caused the Indenture to be signed in its name by its Executive Director and attested by its Secretary, and the Trustee, in token of its acceptance of the trusts created hereunder, has caused the Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written.

ONTARIO PUBLIC FINANCING AUTHORITY
By:

Executive Director
ATTEST:

Secretary

ZIONS BANCORPORATION, NATIONAL
ASSOCIATION, as Trustee
By:

Authorized Officer
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EXHIBIT A

FORM OF BOND

UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF

THE DEPOSITORY (AS DEFINED IN THE INDENTURE) TO THE BOND REGISTRAR

FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME

AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS

REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY

TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR

TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

No. ____ $__________

UNITED STATES OF AMERICA

STATE OF CALIFORNIA

ONTARIO PUBLIC FINANCING AUTHORITY
WATER REVENUE BONDS, SERIES 2024A

INTEREST RATE MATURITY DATE ORIGINAL ISSUE DATE CUSIP
____% August 1, 20___ _____, 2024 _____
REGISTERED OWNER CEDE & CO.

PRINCIPAL AMOUNT: _________________________________________ DOLLARS The ONTARIO PUBLIC FINANCING AUTHORITY, a joint exercise of powers agency that is duly organized and existing under the laws of the State of California (the “Authority”), for value received, hereby promises to pay to the Registered Owner specified above or registered assigns (the “Registered Owner”), on the Maturity Date specified above (subject to any right of prior redemption hereinafter provided for), the Principal Amount specified above, in lawful money of the United States of America, and to pay interest thereon in like lawful money from the interest payment date next preceding the date of authentication of this Bond (unless: (i) this Bond is authenticated after the fifteenth day of the calendar month preceding an interest payment date, whether or not such day is a business day, and on or before the following interest payment date, in which event it shall bear interest from such interest payment date; or (ii) this Bond is authenticated on or before _____ 15, 20__, in which event it shall bear interest from the Original Issue Date identified above; provided, however, that if as of the date of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on this Bond), at the Interest Rate per annum specified above, payable semiannually on February 1 and August 1 in each year, commencing _____ 1, 20__, calculated on the basis of a 360 day year composed of twelve 30 day months. Principal hereof and premium, if any, upon early redemption hereof are payable by check of the Trustee upon presentation and 3089
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surrender hereof at the Office (as defined in the hereinafter described Indenture) of Zions Bancorporation, National Association, as trustee (the “Trustee”). Interest hereon is payable by check of the Trustee sent by first class mail on the applicable interest payment date to the Registered Owner hereof at the Registered Owner’s address as it appears on the registration books of the Trustee as of the close of business on the fifteenth day of the month preceding each interest payment date (except that in the case of a registered owner of one million dollars ($1,000,000) or more in principal amount, such payment may, at such registered owner’s option, be made by wire transfer of immediately available funds to an account in the United States in accordance with written instructions provided to the Trustee by such registered owner prior to the fifteenth (15th) day of the month preceding such interest payment date).

Capitalized terms that are used herein and not defined shall have the meanings that are given to such terms in the Indenture.

This Bond is not a debt of the members of the Authority, the State of California, or any of its political subdivisions (other than the Authority), and neither the members of the Authority or said State, nor any of its political subdivisions (other than the Authority), is liable hereon, nor in any event shall this Bond be payable out of any funds or properties of the Authority other than the Authority Revenues (as such term is defined in the Indenture of Trust, dated as of _____ 1, 2024 (the “Indenture”), by and between the Authority and the Trustee) and other moneys pledged therefor under the Indenture. The obligation of the City of Ontario (the “City”) to make payments in accordance with the Installment Purchase Agreement (as such term is defined in the Indenture) is a limited obligation of the City as set forth in the Installment Purchase Agreement and the City shall have no liability or obligation in connection herewith except with respect to such Series 2024 Installment Payments to be made pursuant to the Installment Purchase Agreement. The Bonds do not constitute an indebtedness of the Authority in contravention of any constitutional or statutory debt limitation or restriction.

This Bond is one of a duly authorized issue of bonds of the Authority designated as the “Ontario Public Financing Authority Water Revenue Bonds, Series 2024A” (the “Bonds”), of an aggregate principal amount of ____________________ Dollars ($__________), all of like tenor and date (except for such variation, if any, as may be required to designate varying series, numbers or interest rates) and all issued pursuant to the provisions of the Joint Exercise of Powers Agreement, dated as of June 1, 2013 9the “JPA Agreement”), by and between the City and the Ontario Housing Authority, as amended from time to time and the laws of the State of California and pursuant to the Indenture and the resolution authorizing the issuance of the Bonds. Reference is hereby made to the Indenture (copies of which are on file at the office of the Authority) and all supplements thereto for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Authority Revenues, and the rights thereunder of the Owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Authority hereunder, to all of the provisions of which the Registered Owner of this Bond, by acceptance hereof, assents and agrees. The Bonds have been issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof.

The Bonds have been issued by the Authority to finance certain public capital improvements and related costs, as more fully described in the Installment Purchase Agreement.

This Bond and the interest, premium, if any, hereon and all other Bonds and the interest and premium, if any, thereon (to the extent set forth in the Indenture) are special obligations of the 3090
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Authority, and are payable from, and are secured by a pledge and lien on the Authority Revenues, including all Series 2024 Installment Payments received from the City by the Authority or the Trustee, and any other amounts on deposit in certain funds and accounts created under the Indenture.

As and to the extent set forth in the Indenture, all of the Authority Revenues are exclusively and irrevocably pledged in accordance with the terms hereof and the provisions of the Indenture, to the payment of the principal of and interest and premium (if any) on the Bonds.

The Indenture and the rights and obligations of the Authority and the Owners of the Bonds and the Trustee may be modified or amended from time to time and at any time with the written consent of the Owners of a majority in aggregate principal amount of all Bonds then Outstanding, exclusive of Bonds disqualified as set forth in the Indenture, in the manner, to the extent and upon the terms provided in the Indenture, but no such modification or amendment may: (i) extend the fixed maturity of any Bonds, or reduce the amount of principal thereof or premium (if any) thereon, or extend the time of payment, or change the method of computing the rate of interest thereon, or extend the time of payment of interest thereon, without the consent of the owner of each Bond so affected; or (ii) reduce the aforesaid percentage of Bonds the consent of the Owners of which is required to affect any such modification or amendment, or permit the creation of any lien on the Authority Revenues and other assets pledged under the Indenture prior to or on a parity with the lien created by the Indenture except as permitted in the Indenture, or deprive the Owners of the Bonds of the lien created by the Indenture on such Authority Revenues and other assets, except as expressly provided in the Indenture, without the consent of the Owners of all of the Bonds then Outstanding.

The Indenture and the rights and obligations of the Authority, the Trustee and the Owners of the Bonds may also be modified or amended for certain purposes described more fully in the Indenture at any time in the manner, to the extent and upon the terms provided in the Indenture by a supplemental indenture, which the Authority and the Trustee may enter into without the consent of any Bond Owners, if the Trustee shall receive an opinion of Bond Counsel to the effect that the provisions of such supplemental indenture will not materially adversely affect the interests of the Owners of the Outstanding Bonds.

The Bonds with stated maturities on or after August 1, 20__, are subject to redemption prior to their respective stated maturities, as a whole or in part as directed by the Authority in a Request provided to the Trustee at least 35 days (or such lesser number of days acceptable to the Trustee in the sole discretion of the Trustee, such notice for the convenience of the Trustee) and by lot within each maturity in integral multiples of $5,000, on August 1, 20__ or any date thereafter at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium.

The Bonds with stated maturities on August 1, 20__ are subject to mandatory sinking fund redemption in part (by lot) on August 1, 20__ and each August 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule:
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Redemption Date
(August 1)
Principal
Amount

* Maturity.

Redemption Date
(August 1)
Principal
Amount

* Maturity.

Redemption Date
(August 1)
Principal
Amount

* Maturity.

The Bonds with stated maturities on August 1, 20__ are subject to mandatory sinking fund redemption in part (by lot) on August 1, 20__ and each August 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule:
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Redemption Date
(August 1)
Principal
Amount

* Maturity.

If some but not all of the Bonds maturing on August 1, 20__, August 1, 20__, August 1, 20__ or August 1, 20__ are redeemed pursuant to subsection (a), the principal amount of the applicable Bonds to be redeemed pursuant to this subsection (b) on any subsequent August 1 will be reduced, by $5,000 or an integral multiple thereof, as designated by the Authority in a Certificate of the Authority filed with the Trustee; provided, however, that the aggregate amount of such reductions shall not exceed the aggregate amount of the applicable Bonds redeemed pursuant to subsection (a).

As provided in the Indenture, notice of redemption shall be mailed by the Trustee by first class mail not less than twenty (20) days nor more than sixty (60) days prior to the redemption date to the respective Owners of any Bonds designated for redemption at their addresses appearing on the registration books of the Trustee, but neither the failure to receive such notice nor any defect in the notice or the mailing thereof shall affect the validity of the proceedings for redemption or the cessation of accrual of interest thereon from and after the date fixed for redemption.

If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest shall cease to accrue hereon from and after the date fixed for redemption.

If an Event of Default, as defined in the Indenture, shall occur, the principal of all of the Bonds and the interest accrued thereon may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture, but such declaration and its consequences may be rescinded and annulled as further provided in the Indenture.

This Bond is transferable by the Registered Owner hereof, in person or by his or her duly authorized attorney in writing, at said office of the Trustee but only in the manner, subject to the limitations and upon payment of the taxes and charges provided in the Indenture and upon surrender and cancellation of this Bond. Upon registration of such transfer, a new Bond or Bonds of the same series, of authorized denomination or denominations, for the same aggregate principal amount of the same maturity will be issued to the transferee in exchange therefor.

Bonds may be exchanged at said office of the Trustee for a like aggregate principal amount of Bonds of other authorized denominations of the same series and same maturity, but only in the manner, subject to the limitations and upon payment of the taxes and charges provided in the Indenture.

The Trustee shall not be required to register the transfer or exchange of any Bond during the period in which the Trustee is selecting Bonds for redemption or any Bond that has been selected for redemption.
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The Authority and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any notice to the contrary.

It is hereby certified that all of the things, conditions and acts that are required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time, form and manner as required by the JPA Agreement, and the laws of the State of California and that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit under any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.

This Bond shall not be entitled to any benefit under the Indenture or become valid or obligatory for any purpose until the certificate of authentication hereon endorsed shall have been manually signed by the Trustee.

IN WITNESS WHEREOF, the Authority has caused this Bond to be executed in its name and on its behalf with the manual or facsimile signature of its Executive Director and attested to by the manual or facsimile signature of its Secretary, all as of the Original Issue Date specified above.

ONTARIO PUBLIC FINANCING AUTHORITY
By:

Executive Director
Attest:

Secretary of the Board
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION
TO APPEAR ON BONDS]
This is one of the Bonds described in the within-mentioned Indenture.

Dated: _____, 2024 ZIONS BANCORPORATION, NATIONAL
ASSOCIATION, as Trustee
By:

Authorized Signatory
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[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth LLP, in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office.

Secretary of the Board of the Ontario Public Financing
Authority
[FORM OF ASSIGNMENT]
For value received the undersigned hereby sells, assigns and transfers unto (Name, Address and Tax Identification or
Social Security Number of Assignee)
the within registered Bond and hereby irrevocably constitute(s) and appoint(s) __________________ _________________________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises.

Dated:

Note: The signature(s) on this Assignment must
correspond with the name(s) as written on the
face of the within Bond in every particular
without alteration or enlargement or any
change whatsoever.

Signature Guaranteed:

Note: Signature guarantee shall be made by
a guarantor institution participating in the
Securities Transfer Agents Medallion Program
or in such other guarantee program acceptable
to the Trustee.
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$_____

ONTARIO PUBLIC FINANCING AUTHORITY
WATER REVENUE BONDS, SERIES 2024A

BOND PURCHASE AGREEMENT
July __, 2024
Ontario Public Financing Authority
303 East B Street
Ontario, California 91764
City of Ontario
303 East B Street
Ontario, California 91764
Ladies and Gentlemen:

Samuel A. Ramirez & Co., Inc. (the “Underwriter”) hereby offers to enter into this Bond Purchase Agreement (the “Purchase Agreement”) with you, the Ontario Public Financing Authority (the “Authority”) and the City of Ontario (the “City”), for the purchase by the Underwriter and the delivery by the Authority of the above-referenced Bonds (the “Bonds”). The proceeds of the Bonds will be used to: (i) finance certain capital improvements to the City’s municipal water system; [(ii) purchase a municipal bond insurance policy to guarantee payment of the principal of and interest on the Bonds (the “Policy”); (iii) purchase a municipal bond debt service reserve insurance policy for deposit in the Reserve Fund (the “Reserve Policy”);] and (iv) pay costs incurred in connection with the issuance of the Bonds. This offer is subject to your acceptance prior to 11:59 p.m., California time, on the date hereof, and if not so accepted will be subject to withdrawal by the Underwriter upon written notice delivered to the Authority and the City at any time prior to the acceptance thereof by the Authority and the City. Upon such acceptance, this Purchase Agreement shall be in full force and effect in accordance with its terms and shall be binding upon you and the Underwriter. All terms not defined herein shall have the meanings set forth in the Indenture and the Installment Purchase Agreement (each defined below).

The Authority and the City acknowledge and agree that: (i) the purchase and sale of the Bonds pursuant to this Purchase Agreement is an arm’s-length commercial transaction among the City, the Authority and the Underwriter in which the Underwriter is acting solely as a principal and not as an agent of the Authority or the City, and the Underwriter is not acting as a municipal advisor, financial advisor or fiduciary to the Authority or the City; (ii) the Underwriter has not assumed any advisory or fiduciary responsibility to the Authority or the City with respect to the transaction contemplated by this Purchase Agreement and the discussions, undertakings or procedures leading thereto (irrespective of whether the Underwriter or any affiliate of the Underwriter has provided other services or is currently providing other services to the Authority or the City on other matters); (iii) the only obligations that the Underwriter has to the Authority and the City with respect to the transaction contemplated by this Purchase Agreement are expressly set forth in this Purchase Agreement; (iv) the Underwriter has financial and other interests that differ from those of the 3096
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Authority and the City; and (v) the Authority and the City have consulted their own financial and/or municipal, legal, accounting, tax and other advisors, as applicable, to the extent that the Authority and the City have deemed appropriate. The Authority acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the Municipal Securities Rulemaking Board (the “MSRB”).

1. Upon the terms and conditions and upon the basis of the representations herein set forth, the Underwriter hereby agrees to purchase from the Authority for offering to the public, and the Authority hereby agrees to sell and deliver to the Underwriter, all (but not less than all) of the $_____ aggregate principal amount of the Bonds, at a price of $_____, being the principal amount of the Bonds, plus/less a net original issue premium/discount of $_____ and less an Underwriter’s discount of $____.

The Bonds shall mature in the amounts and on the dates, and bear interest at the rates, set forth in Exhibit A. The Bonds shall be as described in and shall be secured under and pursuant to an Indenture of Trust, dated as of August 1, 2024 (the “Indenture”), by and between the Authority and Zions Bancorporation, National Association, as trustee (the “Trustee”), substantially in the form previously submitted to the Underwriter with only such changes therein as shall be mutually agreed upon by the Authority, the City, the Trustee and the Underwriter. The Bonds shall be subject to redemption as set forth in the Indenture.

The obligation of the Authority to pay the principal of and interest on the Bonds is a special obligation of the Authority, payable solely from Authority Revenues (as defined in the Indenture), and certain other amounts held under the Indenture. Authority Revenues consist primarily of Series 2024 Installment Payments (referred to herein as “Installment Payments”) made by the City to the Authority pursuant to the Installment Purchase Agreement, dated as of August 1, 2024 (the “Installment Purchase Agreement”), by and between the Authority and the City. The principal of and interest on the Bonds are not required to be paid from any other funds of the Authority, including any proceeds of any taxes, and the Bonds do not constitute a debt or pledge of the faith and credit of the Authority or the State of California (the “State”) or any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction.

The obligation of the City to make Installment Payments under the Installment Purchase Agreement is a special obligation of the City, secured by a pledge of Net Revenues and payable solely from Net Revenues of the City’s municipal water system (the “Water System”). [The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under the Policy to be issued concurrently with the delivery of the Bonds by _____ (the “Insurer”). The Insurer will also issue the Reserve Policy concurrently with the delivery of the Bonds.]
The Authority and the City hereby ratify the use by the Underwriter of the Preliminary Official Statement, dated July __, 2024 relating to the Bonds (together with the cover page and all appendices thereto, and any supplements thereof, the “Preliminary Official Statement”), and authorize the Underwriter to use and distribute the Preliminary Official Statement, the Official Statement (as defined below), the Indenture, the Installment Purchase Agreement, the Continuing Disclosure Certificate as required by Securities and Exchange Commission Rule 15c2-12 (“Rule 15c2-12”), dated the Closing Date (as such term is defined herein) relating to the Bonds (the “Continuing Disclosure Certificate”), and substantially in the form attached as an appendix to the 3097
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Official Statement, executed by the City, and this Purchase Agreement, and all information contained therein, and all other documents, certificates and statements furnished by the Authority and the City to the Underwriter in connection with the offer and sale of the Bonds by the Underwriter. The Authority and the City have heretofore “deemed final” the Preliminary Official Statement within the meaning of Rule 15c2-12.

The City will undertake pursuant to the Continuing Disclosure Certificate to provide certain annual financial and operating information and notices of the occurrence of certain events. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the final Official Statement. This undertaking will be entered into in order to assist the Underwriter in complying with Rule 15c2-12.

2. The Underwriter agrees to offer all of the Bonds to the public initially at the prices (or yields) set forth on the inside cover page of the final Official Statement pertaining to the Bonds, dated July __, 2024 (together with all appendices thereto, and with such changes therein and supplements thereto and as are consented to in writing by the Underwriter, the “Official Statement”). Subsequent to the initial public offering of the Bonds, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds, subject to Section 5 hereof. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. The Underwriter agrees that prior to the time the final Official Statement relating to the Bonds is available, the Underwriter will send to any potential purchaser of the Bonds, upon the request of such potential purchaser, a copy of the most recent Preliminary Official Statement. Such Preliminary Official Statement shall be sent by first class mail or electronic distribution (or other equally prompt means) not later than the first business day following the date upon which each such request is received.

3. The Authority shall also deliver a sufficient number of copies of the Official Statement to enable the Underwriter to distribute a single copy of each Official Statement to any potential customer of the Underwriter requesting an Official Statement during the time period beginning when the Official Statement becomes available and ending on the End Date (defined below). The Authority shall deliver these copies to the Underwriter no later than the earlier of: (i) seven (7) business days after the execution of this Purchase Agreement; or (ii) one (1) business day prior to the Closing Date in order to permit the Underwriter to comply with Rule 15c2-12, and the applicable rules of the MSRB, with respect to distribution of the Official Statement. The Authority and City shall prepare the Official Statement, including any amendments thereto, in word-searchable PDF format as described in the MSRB’s Rule G-32 and shall provide the electronic copy of the word-searchable PDF format of the Official Statement to the Underwriter no later than one (1) business day prior to the Closing Date to enable the Underwriter to comply with MSRB Rule G-32.

The Underwriter shall inform the City in writing of the End Date, and covenants to file the Official Statement with the MSRB on a timely basis.

The Official Statement, as of its date, as of the Closing Date and as of the date of any update, amendment or supplement thereto as required hereby subsequent to the Closing (as such term is defined herein), up to and including the date which is twenty-five (25) days following the end of the Underwriting Period (as such term is defined herein) (the “End Date”), will be correct and complete in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
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If, after the date of this Purchase Agreement and until the earlier of: (i) ninety (90) days after the end of the “underwriting period” (as defined in Rule 15c2-12) (the “Underwriting Period”); or (ii) twenty-five (25) days after the end of the Underwriting Period if the Official Statement is available to any person from the MSRB as contemplated by Rule 15c2-12(b)(4), any event shall occur or circumstance shall exist of which the Authority or the City have knowledge that would cause the Official Statement to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Authority or the City, as the case may be, shall notify the Underwriter (and for the purpose of this Section provide the Underwriter with such information as it may from time to time reasonably request), and, if in the opinion of the City, the Authority or the Underwriter, such event or circumstance requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority and the City will, at their expense, supplement or amend the Official Statement in a form and manner jointly approved by the City, the Authority and the Underwriter and furnish to the Underwriter a reasonable number of copies of such supplement or amendment provided that the Underwriter agrees that it will promptly notify the Authority and the City of the end of the Underwriting Period. The end of the Underwriting Period shall be the Closing Date unless the Underwriter informs the City and Authority in writing that the end of the Underwriting Period will be a different date.

4. At 8:30 a.m., Pacific Time, on August __, 2024, or at such other time or date as shall be agreed upon by the Underwriter, the Authority and the City (such time and date being herein referred to as the “Closing Date”), the Authority will deliver to the Underwriter, at a location or locations to be designated by the Underwriter, the Bonds in book-entry form (all Bonds having had CUSIP numbers assigned to them thereon), duly executed by an authorized officer of the Trustee as provided in the Indenture, and the other documents herein mentioned; and the Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 of this Purchase Agreement in immediately available funds (such delivery and payment being herein referred to as the “Closing”).

Upon initial issuance, the ownership of such Bonds shall be registered in the registration books kept by the Trustee in the name of Cede & Co., as the nominee of The Depository Trust Company.

It is anticipated that CUSIP numbers will be printed on the Bonds, but neither the failure to provide such numbers nor any error with respect thereto shall constitute a cause for failure or refusal by the Underwriter to accept delivery of the Bonds in accordance with the terms of this Purchase Agreement.

5. (a) The Underwriter agrees to assist the Authority in establishing the issue price of the Bonds and shall execute and deliver to the Authority at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority and Bond Counsel (as such term is defined herein), to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.
(b) Except as otherwise set forth in Exhibit A, the Authority will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Agreement, the 3099
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Underwriter shall report to the Authority the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Authority the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either: (i) the Underwriter has sold all Bonds of that maturity; or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that the Underwriter’s reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Authority or Bond Counsel. For purposes of this Section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds.
(c) The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A. Exhibit A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the Underwriter represents that: (i) the 10% test has been satisfied (assuming that orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement); and (ii) the 10% test has not been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “holdthe-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
(i) the close of the fifth (5th) business day after the sale date; or (ii) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.

The Underwriter will advise the Authority promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. (d) The Underwriter confirms that:
(i) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable:
(A)(1) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter; and (2) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter;
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(B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below); and (C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(ii) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to: (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer; and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires. (e) The Authority and the City acknowledge that, in making the representation set forth in this section, the Underwriter will rely on: (i) in the event that a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires; and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires. The Authority and the City further acknowledge that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a third-party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds. (f) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section.

Further, for purposes of this section:
(i) “public” means any person other than an underwriter or a related party;
(ii) “underwriter” means: (A) any person that agrees pursuant to a written contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public; and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial 3101
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sale of the Bonds to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public); (iii) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to: (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another); (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another); or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and
(d) “sale date” means the date of execution of this Purchase Agreement by all parties.

6. The Underwriter represents to and agrees with the Authority and the City that, as of the date hereof and as of the Closing Date:
(a) The Underwriter is duly authorized to execute this Purchase Agreement and to take any action under this Purchase Agreement required to be taken by it; (b) The Underwriter is in compliance with MSRB Rule G-37 with respect to the Authority and the City, and is not prohibited thereby from acting as the underwriter with respect to securities of the Authority and the City; and
(c) The Underwriter has, and has had, no financial advisory relationship, as that term is defined in California Government Code Section 53590(c) or MSRB Rule G-32, with the City or the Authority with respect to the Bonds, and no investment firm controlling, controlled by or under common control with such Underwriter has had any such financial advisory relationship.

7. The Authority represents, warrants and covenants to the Underwriter that:
(a) The Authority is a joint exercise of powers authority that is duly organized and validly existing pursuant to the laws of the State of California and has all necessary power and authority to enter into and perform its duties under the Indenture, the Installment Purchase Agreement and this Purchase Agreement (collectively, the “Authority Documents”) and, when executed and delivered by the respective parties thereto, the Authority Documents will constitute the legal, valid and binding obligations of the Authority in accordance with their respective terms. (b) Neither the execution and delivery of the Authority Documents, or the approval of the Preliminary Official Statement or the approval and execution of the Official Statement, and compliance with the provisions on the Authority’s part contained therein, nor the consummation of any of the other transactions herein and therein contemplated, nor the fulfillment of the terms hereof and thereof, conflicts with or constitutes a breach of or default under nor contravenes any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, nor does any such execution, delivery, adoption or compliance result in a security interest in 3102
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or encumbrance of any nature whatsoever upon any of the properties or assets of the Authority under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Authority Documents.
(c) Except as may be required under blue sky or other securities laws of any state, there is no consent, approval, authorization or other order of, or filing with, or certification by, any regulatory authority having jurisdiction over the Authority required for the execution and delivery of the Bonds or the consummation by the Authority of the other transactions contemplated by the Preliminary Official Statement, the Official Statement and this Purchase Agreement. (d) To the best knowledge of the Authority, there is, and on the Closing Date there will be, no action, suit, proceeding or investigation at law or in equity before or by any court or governmental agency or body pending or threatened against the Authority to restrain or enjoin the delivery of any of the Bonds, or the payments to be made pursuant to the Indenture, or in any way contesting or affecting the validity of the Authority Documents or of the Authority to enter into the Authority Documents or contesting the powers of the Authority to perform its obligations under any of the foregoing or in any way contesting the powers of the Authority in connection with any action contemplated by this Purchase Agreement, or in any way questioning or challenging the tax status of interest on the Bonds.
(e) As of its date and as of the date hereof, the information under the caption “THE AUTHORITY” in the Preliminary Official Statement was and is true and correct in all material respects and such information did not and does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (f) As of the date thereof and at all times subsequent thereto up to and including the End Date, the information under the caption “THE AUTHORITY” in the Official Statement will be complete and will not contain any untrue or misleading statement of a material fact or omit to state any material fact (unless an event occurs of the nature described in Section 7(k) below) necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(g) The Authority agrees to cooperate with the Underwriter, at no cost to the Authority, in endeavoring to qualify the Bonds for offering and sale under the securities or blue sky laws of such jurisdictions of the United States as the Underwriter may request; provided, however, that the Authority will not be required to execute a special or general consent to service of process in any jurisdiction in which it is not now so subject or to qualify to do business as a foreign agency in any jurisdiction where it is not so qualified.
(h) By official action of the Authority prior to or concurrently with the execution hereof, the Authority has duly approved the distribution of the Preliminary Official Statement and the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations on its part contained in the Authority Documents and the consummation by it of all other transactions contemplated by the Preliminary Official Statement, the Official Statement and this Purchase Agreement.
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(i) The Authority is not in breach of or default under any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument.
(j) The Authority is not in default, nor has been in default at any time, as to the payment of principal or interest with respect to an obligation issued by the Authority or with respect to an obligation guaranteed by the Authority as guarantor. (k) If the Official Statement is amended or supplemented as to information relating to the Authority, its functions, duties and responsibilities, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subsection) at all times subsequent thereto up to and including the End Date, the portions of the Official Statement so supplemented or amended (provided, however, that the Authority makes no warranty, representation or covenant with respect to any financial and statistical data contained therein or information provided by the Underwriter) will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading. (l) The Authority covenants that it will comply with all tax covenants relating to it in the Authority Documents and the Tax Certificate to be delivered by the City and the Authority at Closing.
(m) No consent, approval, authorization or other action by a governmental or regulatory authority that has not been obtained is or will be required of the Authority for the delivery and sale of the Bonds or the consummation of the other transactions contemplated by this Purchase Agreement, the Preliminary Official Statement and the Official Statement, except as may be required under the state securities or blue sky laws in connection with the sale of the Bonds by the Underwriter.
(n) Any certificate of the Authority delivered to the Underwriter shall be deemed a representation and warranty by the Authority to the Underwriter as to the statements made therein. (o) Other than as described in the Preliminary Official Statement and the Official Statement, as of the time of acceptance hereof and as of the Closing the Authority does not and will not have outstanding any indebtedness which is secured by a lien on the Installment Payments superior to or on a parity with the lien of the Bonds thereon. (p) Between the date of this Purchase Agreement and the Closing Date, the Authority will not, without the prior written consent of the Underwriter, and except as disclosed in the Preliminary Official Statement and the Official Statement, offer or issue any bonds, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent. (q) The Authority is not presently and as a result of the execution of the Authority Documents and the sale of the Bonds will not be in violation of any debt limitation, appropriation limitation or any other provision of the California Constitution or statutes or any additional debt or similar provision of any bond, note, contract or other evidence of indebtedness to which the Authority is a party or to which the Authority is bound. 3104
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(r) The Authority will not knowingly take or omit to take any action, which action or omission will in any way cause the proceeds from the sale of the Bonds to be applied in a manner other than as provided in the Authority Documents, unless otherwise required by law.

8. The City represents, warrants and covenants to the Underwriter that:
(a) The City is a municipal corporation that is duly organized under the laws of the State of California, and has all necessary power and authority to enter into and perform its duties under the Installment Purchase Agreement, the Continuing Disclosure Certificate and this Purchase Agreement (collectively, the “City Documents”) and, when executed and delivered by the respective parties thereto, the City Documents will constitute the legal, valid and binding obligations of the City in accordance with their respective terms.
(b) Neither the execution and delivery of the City Documents, or the approval of the Preliminary Official Statement or the approval and execution of the Official Statement, and compliance with the provisions on the City’s part contained therein, nor the consummation of any of the other transactions herein and therein contemplated, nor the fulfillment of the terms hereof and thereof, conflicts with or constitutes a breach of or default under nor contravenes any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, nor does any such execution, delivery, adoption or compliance result in a security interest in or encumbrance of any nature whatsoever upon any of the properties or assets of the City under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the City Documents. (c) Except as may be required under blue sky or other securities laws of any state, there is no consent, approval, authorization or other order of, or filing with, or certification by, any regulatory authority having jurisdiction over the City required for the execution and delivery of the Bonds or the consummation by the City of the other transactions contemplated by the Preliminary Official Statement, the Official Statement and this Purchase Agreement. (d) To the best knowledge of the City, there is, and on the Closing Date there will be, no action, suit, proceeding or investigation at law or in equity before or by any court or governmental agency or body pending or threatened against the City to restrain or enjoin the delivery of any of the Bonds, or the payments to be made pursuant to the Installment Purchase Agreement and Indenture, or in any way contesting or affecting the validity of the City Documents or of the City to approve or enter into the City Documents, or in any way questioning or challenging the tax status of interest on the Bonds.
(e) As of its date and as of the date hereof, the information relating to the City, the Bonds and the Water System contained in the Preliminary Official Statement was and is true and correct in all material respects and such information did not and does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (f) As of the date thereof and at all times subsequent thereto up to and including the End Date, the information relating to the City, the Bonds and the Water System contained in the Official Statement will be complete and will not contain any untrue or misleading statement of a material fact or omit to state any material fact (unless an event occurs of the nature described in 3105
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Section 8(k) below) necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(g) The City agrees to cooperate with the Underwriter, at no cost to the City, in endeavoring to qualify the Bonds for offering and sale under the securities or blue sky laws of such jurisdictions of the United States as the Underwriter may request; provided, however, that the City will not be required to execute a special or general consent to service of process in any jurisdiction in which it is not now so subject or to qualify to do business as a foreign agency in any jurisdiction where it is not so qualified.
(h) By official action of the City prior to or concurrently with the execution hereof, the City has duly approved the distribution of the Preliminary Official Statement and the Official Statement, and has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations on its part contained in the City Documents and the consummation by it of all other transactions contemplated by the Preliminary Official Statement, the Official Statement and this Purchase Agreement.
(i) The City is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument.
(j) The City is not in material default, nor has been in material default at any time, as to the payment of principal or interest with respect to an obligation issued by the City or with respect to an obligation guaranteed by the City as guarantor. (k) If the Official Statement is amended as to information relating to the Water System, the City, its functions, duties and responsibilities, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subsection) at all times subsequent thereto up to and including the End Date, the portions of the Official Statement so supplemented or amended (provided, however, that the City makes no warranty, representation or covenant with respect to any information provided by the Underwriter) will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading.
(l) The City covenants that it will comply with all tax covenants relating to it in the City Documents and the Tax Certificate to be delivered by the City and the Authority at Closing. (m) The written information supplied by the City to the Underwriter with respect to the Water System is true, correct and complete in all material respects for the purposes for which it was supplied.
(n) No consent, approval, authorization or other action by a governmental or regulatory agency that has not been obtained is or will be required of the City for the delivery and sale of the Bonds or the consummation of the other transactions contemplated by this Purchase Agreement, the Preliminary Official Statement and the Official Statement, except for such licenses, 3106
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certificates, approvals, variances or permits which may be necessary for the construction or operation of the Water System which the City has applied for (or will apply for in the ordinary course of business) and expects to receive, and except as may be required under the state securities or blue sky laws in connection with the sale of the Bonds by the Underwriter. (o) The City will not take or omit to take any action which action or omission will in any way cause the proceeds from the sale of the Bonds to be applied in a manner contrary to that provided in the Indenture and as described in the Preliminary Official Statement and Official Statement, unless otherwise required by law.
(p) Any certificate of the City delivered to the Underwriter shall be deemed a representation and warranty by the City to the Underwriter as to the statements made therein. (q) Other than as described in the Preliminary Official Statement and the Official Statement, as of the time of acceptance hereof and as of the Closing, the City does not and will not have outstanding any indebtedness which is secured by a lien on the Net Revenues superior to or on a parity with the lien thereon established under the Indenture. (r) Between the date of this Purchase Agreement and the Closing Date, the City will not, without the prior written consent of the Underwriter, and except as disclosed in the Preliminary Official Statement and the Official Statement, offer or issue any bonds, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent payable from the Net Revenues.
(s) The City is not presently and as a result of the execution of the City Documents and the sale of the Bonds will not be in violation of any debt limitation, appropriation limitation or any other provision of the California Constitution or statutes or any additional debt or similar provision of any bond, note, contract or other evidence of indebtedness to which the City is a party or to which the City is bound.
(t) Based on a review of its previous undertakings, the City has not, in the last five years, failed to comply in any material respect with its obligations under any continuing disclosure undertaking entered into pursuant to Rule 15c2-12 except as disclosed in the Preliminary Official Statement and the Official Statement. The City will undertake, pursuant to the Continuing Disclosure Certificate to provide annual reports and notices of certain events in accordance with the requirements of Rule 15c2-12.

9. The Underwriter has entered into this Purchase Agreement in reliance upon the representations, warranties and agreements of the Authority and the City contained herein, and upon the accuracy of the statements to be contained in the documents and instruments to be delivered at the Closing. The Underwriter’s obligations under this Purchase Agreement are and shall be subject to the following further conditions:
(a) At the time of Closing, this Purchase Agreement, the Indenture, the Installment Purchase Agreement, and the Continuing Disclosure Certificate (collectively the “Legal Documents”), all as described in the Preliminary Official Statement and the Official Statement, shall be in full force and effect as valid and binding agreements between or among the various parties thereto, and the Legal Documents and the Official Statement shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter, and there shall be 3107
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in full force and effect such resolutions as, in the opinion of Stradling Yocca Carlson & Rauth LLP (“Bond Counsel”), shall be necessary in connection with the transactions contemplated hereby. (b) At or prior to the Closing, the Underwriter shall receive the following documents, in each case satisfactory in form and substance to them:
(1) The unqualified approving opinion of Bond Counsel, dated the Closing Date, addressed to the Authority, the City, the Trustee and the Underwriter (or a reliance letter to the Trustee and the Underwriter), in substantially the form attached as an appendix to the Official Statement.
(2) A supplemental opinion of Bond Counsel, dated the Closing Date addressed to the Underwriter, in substantially the form attached hereto as Exhibit D. (3) A letter from Stradling Yocca Carlson & Rauth LLP, Disclosure Counsel, dated the Closing Date and addressed to the Underwriter, in substantially the form attached hereto as Exhibit C.
(4) An opinion of Best Best & Krieger LLP, as counsel to the Authority, dated the Closing Date, in form and substance satisfactory to the Underwriter and Bond Counsel, addressed to the Authority, the City, the Trustee and the Underwriter, to the effect that:
(i) the Authority is a joint exercise of powers authority that is duly organized and validly existing under the laws of the State of California; (ii) the resolution of the Authority approving the Preliminary Official Statement and approving and authorizing the execution and delivery of the Official Statement and the Authority Documents (the “Authority Resolution”) was adopted by the Board of Directors of the Authority at a regular meeting on July 2, 2024 at which a quorum was present and acting throughout, and the Authority Resolution is in full force and effect and has not been amended or rescinded;
(iii) Upon information and belief, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or threatened in any way affecting the existence of the Authority, or which would materially adversely impact the Authority’s ability to complete the transactions contemplated by the Authority Documents, the Official Statement or any other document or certificate related to such transactions, restrain or to enjoin the sale, issuance or delivery of the Bonds or the application of the proceeds thereof in accordance with the Indenture or restrain or enjoin the pledge of and lien on Authority Revenues, under the Indenture, or in any way contesting or affecting the validity of the Bonds, the Official Statement or the Authority Documents; and (iv) upon information and belief, the Authority is not in breach of or in default under any applicable law or administrative rule or regulation of the State of California or the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, trust agreement, contract, agreement or other instrument to which the Authority is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the performance by the Authority under the Authority Documents. 3108
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(5) An opinion of Best Best & Krieger LLP, as counsel to the City, dated the Closing Date, in form and substance satisfactory to the Underwriter and Bond Counsel, addressed to the City, the Authority, the Trustee and the Underwriter, to the effect that:
(i) the City is a general law city and municipal corporation that is organized and validly existing under the laws of the State of California; (ii) the resolution of the City approving the Preliminary Official Statement and approving and authorizing the execution and delivery of the Official Statement and the City Documents (the “City Resolution”) was adopted by the City Council at a regular meeting on July 2, 2024 at which a quorum was present and acting throughout, and the City Resolution is in full force and effect and has not been amended or rescinded; (iii) upon information and belief, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or threatened in any way affecting the existence of the City, or which would materially adversely impact the City’s ability to complete the transactions contemplated by the City Documents, the Official Statement or any other document or certificate related to such transactions, restrain or to enjoin the sale, issuance or delivery of the Bonds or the application of the proceeds thereof in accordance with the Indenture or restrain or enjoin the pledge of and lien on Net Revenues, under the Installment Purchase Agreement, or in any way contesting or affecting the validity of the Bonds, the Official Statement or the City Documents; and (iv) upon information and belief, the City is not in breach of or in default under any applicable law or administrative rule or regulation of the State of California or the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, trust agreement, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the performance by the City under the City Documents.
(6) The opinion of counsel to the Trustee, dated the Closing Date in form and substance satisfactory to the Underwriter and Bond Counsel, and addressed to the Authority, the City and the Underwriter, to the effect that:
(i) the Trustee is a national banking association that is duly organized and validly existing under the laws of the United States; (ii) the Trustee has duly authorized the execution and delivery of the Indenture;
(iii) the Indenture has been duly entered into and delivered by the Trustee and assuming due, valid and binding authorization, execution and delivery by the other parties thereto, constitutes the legal, valid and binding obligation of the Trustee enforceable against the Trustee in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally, or by general principles of equity;
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(iv) the Trustee has duly authenticated and delivered the Bonds in its capacity as trustee under the Indenture;
(v) acceptance by the Trustee of the duties and obligations under the Indenture and compliance with provisions thereof will not conflict with or constitute a breach of or default under any law or administrative regulation to which the Trustee is subject; and (vi) all approvals, consents and orders of any governmental authority or agency having jurisdiction in the matter which would constitute a condition precedent to the performance by the Trustee of its duties and obligations under the Indenture have been obtained and are in full force and effect.
(7) An opinion dated the Closing Date and addressed to the Underwriter, of Kutak Rock LLP, counsel to the Underwriter (“Underwriter’s Counsel”), in such form as may be acceptable to the Underwriter.
(8) A certificate, dated the Closing Date, signed by a duly authorized official of the Authority satisfactory in form and substance to the Underwriter and Bond Counsel: (a) confirming as of such date the representations and warranties of the Authority contained in this Purchase Agreement; (b) certifying that the Authority has complied with all agreements, covenants and conditions to be complied with by the Authority at or prior to the Closing under the Authority Documents; and (c) certifying that to the best of such official’s knowledge, no event affecting the Authority has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the Closing the statements or information contained in the Official Statement or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein not misleading in any material respect. (9) A certificate or certificates, dated the Closing Date, signed by a duly authorized official of the City satisfactory in form and substance to the Underwriter and Bond Counsel: (a) confirming as of such date the representations and warranties of the City contained in this Purchase Agreement; (b) certifying that the City has complied with all agreements, covenants and conditions to be complied with by the City at or prior to the Closing under the City Documents; and (c) certifying that to the best of such official’s knowledge, no event affecting the City has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the Closing the statements or information contained in the Official Statement or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein not misleading in any material respect. (10) A certificate, dated the date of the Preliminary Official Statement, signed by a duly authorized official of the Authority deeming the Preliminary Official Statement “final” for purposes of Rule 15c2-12.
(11) A certificate, dated the date of the Preliminary Official Statement, signed by a duly authorized official of the City deeming the Preliminary Official Statement “final” for purposes of Rule 15c2-12.
(12) An executed or certified copy of each of the Legal Documents. 3110
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(13) A true, correct and complete copy of the City Resolution and a certificate dated the Closing Date of a duly authorized officer of the City to the effect that the City resolution has not been amended, modified or rescinded since adoption (except as agreed to in writing by the Underwriter) and is in full force and effect as of the Closing Date. (14) A true, correct and complete copy of the Authority Resolution and a certificate dated the Closing Date of a duly authorized officer of the Authority to the effect that the Authority Resolution has not been amended, modified or rescinded since adoption (except as agreed to in writing by the Underwriter) and is in full force and effect as of the Closing Date. (15) An executed copy of the Official Statement.
(16) A certified copy of the general resolution of the Trustee authorizing the execution and delivery of certain documents by certain officers of the Trustee, which resolution authorizes the execution and delivery of documents such as the Bonds and the Indenture. (17) A certificate of the City with respect to the Water System evidencing that the insurance required by the Installment Purchase Agreement has been procured and is in full force and effect.
(18) A Tax Certificate of the Authority and the City in form and substance acceptable to Bond Counsel.
(19) A certificate of the Trustee, dated the Closing Date to the effect that:
(i) the Trustee is duly organized and existing as a national banking association in good standing under the laws of the United States, having the full power and authority to accept and perform its duties under the Indenture; (ii) subject to the provisions of the Indenture, the Trustee will apply the proceeds from the Bonds to the purposes specified in the Indenture; (iii) the Trustee has duly authorized and executed the Indenture; and
(iv) the Trustee has duly authenticated and delivered the Bonds in its capacity as trustee under the Indenture.
(20) Evidence that the Bonds have been given the ratings set forth in the Official Statement and that such ratings continue in effect as of the Closing Date. (21) [The Policy, duly executed by the Insurer.
(22) The Reserve Policy, duly executed by the Insurer.
(23) An opinion of counsel to the Insurer, dated the Closing Date, addressed to the Authority and the Underwriter, in form and substance satisfactory to the Underwriter and Bond Counsel.
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(24) A certificate or certificates of the Insurer, dated the Closing Date, as to the accuracy of the information relating to the Insurer, the Policy and the Reserve Policy included in the Official Statement and such other matters reasonably requested by the Underwriter and Bond Counsel.
(25) Evidence that a federal tax information form 8038-G has been prepared for filing with respect to the Bonds.
(26) A copy of the Notice of Final Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 8855 of the California Government Code.
(27) An executed Blanket Letter of Representations between the Authority and The Depository Trust Company.
(28) Evidence that the City and/or the Authority have adopted a “local debt policy” within the meaning of California Government Code Section 8855(i). (29) A parity debt certificate of the City evidencing the City’s authority to enter into the Installment Purchase Agreement under the terms of its existing Water System debt. (30) Such additional legal opinions, certificates, proceedings, instruments and other documents as Bond Counsel, the Underwriter and Underwriter’s Counsel may reasonably request to evidence compliance with legal requirements, the truth and accuracy, as of the time of Closing, of the representations contained herein and in the Official Statement and the due performance or satisfaction by the Trustee and the Authority at or prior to such time of all agreements then to be performed and all conditions then to be satisfied. (c) All matters relating to this Purchase Agreement, the Bonds and the sale thereof, the Legal Documents and the consummation of the transactions contemplated by this Purchase Agreement shall have been approved by the Underwriter, such approval not to be unreasonably withheld.

If the conditions to the Underwriter’s obligations contained in this Purchase Agreement are not satisfied or if the Underwriter’s obligations shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and none of the Underwriter, the City or the Authority shall have any further obligation hereunder.

10. The Underwriter shall have the right to terminate this Purchase Agreement, without liability therefore, by written notification to the Authority and the City if at any time at or prior to the Closing:
(a) Legislation shall be enacted by or introduced in the Congress of the United States or recommended to the Congress for passage by the President of the United States, or the Treasury Department of the United States or the Internal Revenue Service or favorably reported for passage to either House of the Congress by any committee of such House to which such legislation has been referred for consideration, a decision by a court of the United States or of the State or the United States Tax Court shall be rendered, or an order, ruling, regulation (final, temporary or proposed), press release, statement or other form of notice by or on behalf of the Treasury 3112
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Department of the United States, the Internal Revenue Service or other governmental agency shall be made or proposed, the effect of any or all of which would be to alter, directly or indirectly, federal income taxation upon interest received on obligations of the general character of the Bonds, or the interest on the Bonds as described in the Official Statement, or other action or events shall have transpired which may have the purpose or effect, directly or indirectly, of changing the federal income tax consequences of any of the transactions contemplated herein; or (b) Legislation shall be introduced in or enacted (or resolution passed) by the Congress or an order, decree, or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary, or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission (the “SEC”), or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering, or sale of obligations of the general character of the Bonds, as contemplated hereby or by the Official Statement or otherwise, is or would be in violation of the federal securities law as amended and then in effect; or
(c) A general suspension of trading on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the SEC or any other governmental authority having jurisdiction, the establishment of material restrictions (not in force as of the date hereof) upon trading securities generally by any governmental authority or any national securities exchange, or any material increase of restrictions now in force (including, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter); or
(d) A general banking moratorium shall have been established by federal, New York or California authorities; or
(e) A decision by a court of the United States shall be rendered, or a stop order, release, regulation or no-action letter by or on behalf of the SEC or any other governmental agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the issuance, offering or sale of the Bonds, including the underlying obligations as contemplated by this Purchase Agreement or by the Official Statement, or any document relating to the issuance, offering or sale of the Bonds, is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act of 1933, as amended, the Exchange Act of 1934, as amended and the Trust Indenture Act of 1939, as amended; or (f) Establishment of any new restrictions in securities materially affecting the free market for securities of the same nature as the Bonds (including the imposition of any limitations on interest rates) or the charge to the net capital requirements of the Underwriter established by the New York Stock Exchange, the SEC, any other Federal or state agency or the Congress of the United States, or by Executive Order; or
(g) A material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; or
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(h) Any amendment to the federal or California Constitution or action by any federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the Authority or the City, its property, income or securities (or interest thereon), or the ability of the City to execute the Installment Purchase Agreement and pledge the Net Revenues to the Series 2024 Installment Payments or of the Authority to issue the Bonds and pledge the Authority Revenues as contemplated by the Indenture and the Official Statement; or (i) There shall have occurred: (1) an outbreak or escalation of hostilities or the declaration by the United States of a national emergency or war; or (2) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis; or (j) There shall have occurred any materially adverse change in the affairs or financial position, results of operations or condition, financial or otherwise, of the Authority or the City, other than changes in the ordinary course of business or activity or in the normal operation of the Authority or the City, except as described in the Preliminary Official Statement and the Official Statement; or
(k) Any event shall occur or facts are discovered which causes any statement contained in the Official Statement to be materially misleading or results in a failure of the Official Statement to state a material fact necessary in order to make the statements in the Official Statement, in the light of the circumstances under which they were made, not misleading, provided, however, that the Underwriter shall not terminate this Purchase Agreement if prior to the Closing and prior to the distribution of the Official Statement to any public investor, the Authority, the City and the Underwriter agree to and shall have amended or supplemented the Official Statement so that the Official Statement as so amended or supplemented will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made in the light of the circumstances in which they were made, not misleading, and, in the sole judgment of the Underwriter, such amendment or supplement would not have a material adverse effect on the marketability or market price of the Bonds on the terms and conditions contemplated by this Purchase Agreement or the ability of the Underwriter to enforce contracts with investors for the sale of Bonds; or
(l) An event described in Section 7(k) or 8(k) hereof shall have occurred which, in the reasonable professional judgment of the Underwriter, requires the preparation and publication of a supplement or amendment to the Official Statement; or (m) The marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially and adversely affected by disruptive events, occurrences or conditions in the securities or debt markets; or
(n) The suspension by the SEC of the trading in the outstanding bonds of the Authority or the City; or
(o) [Any rating of the Bonds or other obligations of the Insurer by a national rating agency shall have been withdrawn or downgraded or placed on negative outlook or negative watch; or]
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(p) Any rating of the Bonds or other obligations of the Authority or the City by a national rating agency shall have been withdrawn, suspended or downgraded or placed on negative outlook or negative watch.

11. Performance by the Authority and the City of their respective obligations under this Purchase Agreement is conditioned upon: (i) performance by the Underwriter of its obligations hereunder; and (ii) receipt by the Authority, the City or the Underwriter of all opinions and certificates to be delivered at Closing by persons and entities other than the Authority or the City.

12. After the Closing and until the End Date: (a) neither the Authority nor the City will adopt any amendment of or supplement to the Official Statement to which the Underwriter shall object in writing or which shall be disapproved by the Underwriter; and (b) if any event relating to or affecting the Bonds, the Authority or the City shall occur as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to an initial purchaser of the Bonds, then the Authority will forthwith prepare and furnish to the Underwriter a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to the Underwriter) which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to an initial purchaser of the Bonds, not misleading. The costs of preparing any necessary amendment or supplement to the Official Statement to be utilized until the End Date shall be borne by the Authority and any costs incurred thereafter incident to amending or supplementing the Official Statement shall be borne by the Underwriter. For the purposes of this Section, the Authority will furnish such information with respect to itself as the Underwriter may from time to time request.

13. (a) The Underwriter shall be under no obligation to pay, and the City or Authority shall pay or cause to be paid out of the proceeds of the Bonds, all expenses incident to the performance of the Authority’s and City’s obligations hereunder, including but not limited to: the cost of photocopying and delivering the Bonds to the Underwriter; the cost of preparing, printing (and/or word processing and reproducing), distributing and delivering the Legal Documents, and the cost of printing, distributing and delivering the Preliminary Official Statement and the Official Statement in such reasonable quantities as requested by the Underwriter; and the fees and disbursements of Bond Counsel, Disclosure Counsel, the Municipal Advisor, any accountants, financial advisors or other engineers or experts or consultants that the Authority or the City have retained in connection with the Bonds and expenses (included in the expense component of the Underwriter’s spread) incurred on behalf of the Authority or City officers or employees which are incidental to implementing this Purchase Agreement, including, but not limited to, meals, transportation and lodging of those officers or employees. (b) Whether or not the Bonds are delivered to the Underwriter as set forth herein, neither the Authority nor the City shall be under any obligation to pay, and the Authority and City shall not pay, any expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds (except those specifically enumerated in subsection (a) of this section), including any advertising expenses and the fees of the California Debt and Investment Advisory Commission, the cost of preparation of any “blue sky” or legal investment memoranda, the fees of Digital Assurance Certification, L.L.C. for a continuing disclosure undertaking compliance review and the fees and disbursements of Underwriter’s Counsel. The Authority and the City acknowledge 3115
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that some or all of the expenses to be paid by the Underwriter may be included as part of the expense component of the underwriting discount or may be reimbursed to the Underwriter as out-of-pocket expenses.

14. Any notice or other communication to be given to the Underwriter may be given by delivering the same to Samuel A. Ramirez & Co., Inc., 633 West Fifth Street, Suite 2693, Los Angeles, California 90071; Attention: Public Finance. Any notice or other communication to be given to the Authority or the City may be given by delivering the same to addresses set forth on the first page of this Purchase Agreement, Attention: Executive Director with respect to the Authority and Attention: City Manager with respect to the City. The approval of the Underwriter when required hereunder or the determination of satisfaction as to any document referred to herein shall be in writing signed by the Underwriter and delivered to you.

15. This Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriter (including the successors or assigns thereof) and no other person shall acquire or have any right hereunder or by virtue hereof.

16. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which such counterparts shall together constitute but one and the same instrument.

17. The representations and warranties of the Authority and the City set forth in or made pursuant to this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or termination of this Purchase Agreement and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and warranties of the Authority and the City and regardless of delivery of and payment for the Bonds.

18. The primary role of the Underwriter, as underwriter, is to purchase the Bonds for resale to investors in an arms-length commercial transaction among the City, the Authority and the Underwriter. The Underwriter, as underwriter, has financial and other interests that differ from those of the Authority and the City.

19. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Authority, the City and the Underwriter, and shall be valid and enforceable as of the time of such acceptance.

20. This Purchase Agreement shall be governed by the laws of the State of California.

This Purchase Agreement shall not be assigned by any of the parties hereto.

21. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understandings between the parties hereto in relation to the sale of Bonds by the Authority to the Underwriter and represents the entire agreement of the parties as to the subject matter herein. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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22. Any provision of this Purchase Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Purchase Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

SAMUEL A. RAMIREZ & CO., INC.

By:

Authorized Officer
The foregoing is hereby agreed to and accepted as of the date first above written:

ONTARIO PUBLIC FINANCING

AUTHORITY
By:

Authorized Officer
Time of Execution: _____________ p.m. California time

CITY OF ONTARIO
By:

Authorized Officer
Time of Execution: _____________ p.m. California time
[EXECUTION PAGE OF BOND PURCHASE AGREEMENT – ONTARIO PUBLIC FINANCING AUTHORITY WATER REVENUE BONDS, SERIES 2024A]
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EXHIBIT A
$_____

ONTARIO PUBLIC FINANCING AUTHORITY
WATER REVENUE BONDS, SERIES 2024A

MATURITY SCHEDULE
Maturity
(August 1)
Principal
Amount
Interest
Rate Yield Price
10% Test
Satisfied*
10% Test
Not
Satisfied
Subject to
Hold-TheOfferingPrice Rule
20__ $ % %
_________________
(T) Term Bond.
(I) [Insured Bond.]
(C) Priced to first optional redemption date of ____ 1, 20__ at par. * At the time of execution of this Purchase Agreement and assuming that orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement. 3118
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EXHIBIT B
$_____

ONTARIO PUBLIC FINANCING AUTHORITY
WATER REVENUE BONDS, Series 2024A

FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Samuel A. Ramirez & Co., Inc. (“Ramirez”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”) based upon the information available to it.

1. Sale of the 10% Maturities. As of the date of this certificate, for each Maturity of the 10% Maturities, the first price at which at least 10% of such Maturity of the Bonds was sold to the Public is the respective price listed in Schedule A.

2. Initial Offering Price of the Undersold Maturities.

Ramirez offered the Undersold Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this Certificate as Schedule B.

As set forth in the Bond Purchase Agreement, Ramirez has agreed in writing that, for each Maturity of the Undersold Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Offering Period for such Maturity, nor would it permit a related party to do so. Pursuant to such agreement, Ramirez has neither offered nor sold any Maturity of the Undersold Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Offering Period.

3. Defined Terms.
(a) 10% Maturities means those Maturities of the Bonds shown in Schedule A hereto as the “10% Maturities.”
(b) Issuer means Ontario Public Financing Authority.
(c) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(d) Offering Period means, with respect to an Undersold Maturity, the period starting on the Sale Date and ending on the earlier of: (i) the close of the fifth business day after the Sale Date; or (ii) the date on which Ramirez has sold a Substantial Amount of such Undersold Maturity to the Public at a price that is no higher than the Initial Offering Price for such Undersold Maturity. (e) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. 3119
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The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (f) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is July __, 2024. (g) Substantial Amount means ten percent.
(h) Underwriter means: (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public; and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). (i) Undersold Maturities means those Maturities of the Bonds shown in Schedule A hereto as the “Undersold Maturities.”
The Issuer may rely on the statements made herein in connection with making the representations set forth in the Tax Certificate to which this Issue Price Certificate is attached and in its efforts to comply with the conditions imposed by the Internal Revenue Code of 1986, as amended (the “Code”). Stradling Yocca Carlson & Rauth LLP may also rely on this Issue Price Certificate for purposes of its opinion regarding the treatment of interest on the Bonds as excludable from gross income for federal income tax purposes. Except as expressly set forth above, the certifications set forth herein may not be relied upon or used by any third party or for any other purpose.

Notwithstanding anything set forth herein, Ramirez is not engaged in the practice of law.

Accordingly, Ramirez makes no representation as to the legal sufficiency of the factual matters set forth herein.

SAMUEL A. RAMIREZ & CO., INC.

By:____________________________________
Name:_________________________________
Dated: August __, 2024
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SCHEDULE A

SALE PRICES OF THE ACTUALLY SOLD MATURITIES AND

INITIAL OFFERING PRICES OF THE OFFERED MATURITIES
(To Be Attached)
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SCHEDULE B

PRICING WIRE OR EQUIVALENT COMMUNICATION
(To Be Attached)
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EXHIBIT C

FORM OF DISCLOSURE COUNSEL LETTER
August __, 2024
Samuel A. Ramirez & Co., Inc.

Los Angeles, California
Re: $_____ Ontario Public Financing Authority Water Revenue Bonds, Series 2024A Ladies and Gentlemen:

We have acted as disclosure counsel to the City of Ontario (the “City”) in connection with the issuance of the above-referenced bonds (the “Bonds”) by the Ontario Public Financing Authority (the “Authority”). The Bonds are being purchased by you pursuant to a Bond Purchase Agreement dated July __, 2024 (the “Purchase Agreement”), by and among, the Authority, the City and you, as underwriter of the Bonds. All capitalized terms used herein and not defined herein shall have the meanings that are given to such terms in the Purchase Agreement.

In rendering the advice contained herein, we have examined originals or copies certified or otherwise identified to our satisfaction of: (i) the Preliminary Official Statement dated July __, 2024 relating to the Bonds (together with any additions or modifications set forth in the Official Statement, the “POS”); (ii) the Official Statement dated July __, 2024 (the “Official Statement”) relating to the Bonds; (iii) the Indenture of Trust dated as of August 1, 2024, by and between the Authority and Zions Bancorporation, National Association, as Trustee; (iv) the Continuing Disclosure Agreement dated August __, 2024, executed and delivered by the City; (v) the Installment Purchase Agreement dated as of August 1, 2024, by and between the Authority and the City; and (vi) the letters, certificates, and opinions that were delivered to you pursuant to the provisions of the Purchase Agreement, including, but not limited to, Section 9(b) thereof. This letter relates solely to the electronic version of the POS distributed on July __, 2024 and the electronic version of the Official Statement distributed on __________, 2024.

The conclusions that are expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters that are not directly addressed by such authorities. Such conclusions may be affected by actions that are taken or omitted or events that occur after the date hereof. We have not undertaken to determine, or to inform you or any other person, whether any such actions are taken or omitted or whether such events do occur or any other matters come to our attention after the date hereof. We have assumed, but not independently verified, that the signatures on all documents, letters, opinions and certificates that we have examined are genuine, that all documents which were submitted to us are authentic and were duly and properly executed by the parties thereto and that all representations in the documents that we have reviewed are true and accurate. We have assumed, without independent verification, the accuracy of the factual matters that are represented, warranted or certified in the documents, and of the legal conclusions that are contained in any opinions referenced in the POS or the Official Statement.

By delivering this letter, we are not expressing any opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to 3123
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constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions that are contained in any document that is referenced in the POS or the Official Statement, nor are we expressing any opinion with respect to the state or quality of title to or interest in any assets that are described in or as subject to the lien of the Indenture or the Installment Purchase Agreement or the accuracy or sufficiency of the description that is contained therein of, or the remedies that are available to enforce liens on, any such assets. Our services as disclosure counsel to the City did not involve the rendering of financial or other non-legal advice to you or any other party to the transaction.

Although we have not undertaken to determine independently or verify and are not passing upon and do not assume responsibility for, the accuracy, completeness or fairness of the statements that are contained in the POS or the Official Statement, and are therefore unable to make any representation to you in that regard, we have participated in conferences or corresponded prior to the date of the POS with representatives of the Authority and the City, including the Authority’s General Counsel and the City Attorney, you, your counsel, Urban Futures, Inc. (the City’s Municipal Advisor), and others, during which conferences the contents of the POS and the Official Statement and related matters were discussed. Based upon the information that was made available to us in the course of our participation in such conferences as disclosure counsel to the City, our review of the documents that are referred to above, our reliance on the oral and written statements of the Authority, the City and others, the documents, certificates, instructions and records and the opinions of counsel which are described above and our understanding of applicable law, and subject to the limitations on our role as disclosure counsel, we advise you as a matter of fact but not opinion that no information has come to the attention of the attorneys in the firm representing the City on this matter which caused us to believe that the POS (as of its date or as of the date of the Official Statement) contained, or that the Official Statement (as of its date) contained or (as of the date hereof) contains, any untrue statement of a material fact, or that the POS (as of its date or as of the date of the Official Statement) omitted, or that the Official Statement (as of its date) omitted or (as of the date hereof) omits, to state a material fact that is required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that we express no view with respect to: (i) the expressions of opinion, the assumptions, the projections, estimates and forecasts, the charts, the financial statements or other financial, numerical, economic, demographic or statistical data or graphics or videos that are contained in or accessible via hyperlink from the POS or Official Statement, or assessed valuations contained in the POS and the Official Statement; (ii) any CUSIP numbers or information relating thereto; (iii) information with respect to The Depository Trust Company and its book-entry system; (iv) information contained in the Appendices to the POS and the Official Statement; (v) any information incorporated by reference into the POS or the Official Statement; (vi) information with respect to the underwriter or underwriting matters with respect to the Bonds, including but not limited to information under the caption “UNDERWRITING;” (vii) [any information relating to the Insurer, the Policy, and the Reserve Policy; and (viii)] information with respect to the ratings on the Bonds and the rating agency referenced therein, including but not limited to information under the caption “RATING”). In providing the legal services that are described above, we provided no independent diligence of, and express no view with respect to, the City’s compliance with any obligation to file annual reports or provide notice of events, each as described in Rule 15c2-12. Finally, we advise you that, other than reviewing the various certificates and opinions dated the date hereof executed in connection with the issuance of the Bonds, we have not taken any steps since the date of the Official Statement to verify the accuracy of the statements which are contained in the POS or the Official Statement as of the date hereof. 3124
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By acceptance of this letter you recognize and acknowledge that: (1) the negative assurance above is not an opinion and is based on certain limited activities that were performed by specific attorneys in our firm in our role as disclosure counsel to the City; rather it is a statement of negative assurance regarding factual information that did not come to the attention of the attorneys in our firm working on this matter during the limited activities that we performed as Disclosure Counsel to the City, and our services did not include financial or other non-legal advice; (2) the scope of the activities that were performed by such attorneys in our role as disclosure counsel to the City and for purposes of delivering such negative assurance was inherently limited and does not purport to encompass all activities that are necessary for compliance by you or others in accordance with applicable state and federal securities laws; and (3) the activities that were performed by such attorneys in our role as disclosure counsel to the City rely in part by representations, warranties, certifications and opinions of other parties to the transaction, including representations, warranties and certifications made by the City.

This letter is being furnished to you solely for your benefit in connection with your purchase of the Bonds in accordance with the Purchase Agreement and is not to be used, circulated, quoted or otherwise referred to for any other purpose without our prior written consent. No attorney-client relationship has existed or exists between our firm and you in connection with the issuance of the Bonds or by virtue of this letter. We note that you were represented by separate counsel retained by you in connection with the transaction described in the Official Statement. This letter is limited to matters governed by the laws of the State of California and federal securities laws, and we assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.

Our engagement as disclosure counsel to the City terminates as of the date hereof, and we have not undertaken any duty, and expressly disclaim any responsibility, to advise you as to events occurring after the date hereof with respect to the Bonds or other matters discussed in the Official Statement. This letter is not intended to, and may not, be relied upon by owners of the Bonds, the owners of any beneficial ownership interest in the Bonds or by any other party to whom it is not addressed.

Respectfully submitted,
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EXHIBIT D

FORM OF SUPPLEMENTAL OPINION
August __, 2024
Samuel A. Ramirez & Co., Inc.

Los Angeles, California
Re: $_____ Ontario Public Financing Authority Water Revenue Bonds, Series 2024A Ladies and Gentlemen:

We have examined certified copies of proceedings taken for the sale and issuance of the above-referenced bonds (the “Bonds”), and we have rendered our opinion to the Ontario Public Financing Authority (the “Authority”) this day regarding the validity and enforceability of the Bonds (the “Approving Opinion”). The Bonds are being issued pursuant to an Indenture of Trust dated as of August 1, 2024 (the “Indenture”), by and between the Authority and Zions Bancorporation, National Association, as Trustee. You may rely upon our Approving Opinion as if it were addressed to you.

Capitalized terms that are used herein and not otherwise defined shall have the meaning given to such terms in the Bond Purchase Agreement dated July __, 2024 (the “Purchase Agreement”), by and among the Authority, the City of Ontario (the “City”) and Samuel A. Ramirez & Co., Inc., as Underwriter.

Based upon the foregoing and such other information and documents as we consider necessary to render this opinion, we are of the opinion that:

1. The Purchase Agreement has been duly executed and delivered by the Authority and the City and is valid and binding upon the Authority and the City.

2. The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended.

3. The statements contained in the Official Statement on the cover and under the captions “INTRODUCTION,” “THE BONDS,” “SECURITY FOR THE BONDS” and “TAX MATTERS,” and in “APPENDIX B – DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE INSTALLMENT PURCHASE AGREEMENT AND THE INDENTURE” and “APPENDIX C – FORM OF OPINION OF BOND COUNSEL,” insofar as such statements purport to describe certain provisions of the Bonds, the Indenture, the Installment Purchase Agreement and the opinion of Bond Counsel regarding the tax-exempt nature of the Bonds from federal and State of California income taxes, present a fair and accurate summary of the provisions thereof.

We have not undertaken any duty and expressly disclaim any responsibility to advise the addressee as to events occurring after the date hereof with respect to the Bonds or other matters discussed in the Official Statement.
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The opinions that are expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters which are not directly addressed by such authorities. In delivering this opinion, we have relied upon certain representations of fact and certifications made by the City, the Authority and others. This opinion is limited to matters governed by the laws of the State of California and federal securities laws, and we assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.

Except as expressly set forth in the Approving Opinion, we express no opinion regarding any tax consequences with respect to the Bonds. No opinion is expressed herein with respect to the compliance with, or applicability of, any “blue sky” laws of any state as they relate to the offer or sale of the Bonds.

We call attention to the fact that the foregoing opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken (or not taken) or occur (or do not occur), and we expressly disclaim any responsibility to advise you as to events occurring after the date hereof with respect to the Bonds or other matters discussed in the Official Statement.

You have acknowledged that no attorney-client relationship exists between us with respect to any matters related to the Bonds.

We further call attention to the fact that the rights and obligations under the Purchase Agreement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion in appropriate cases and by the limitations on remedies against public agencies in the State of California.

This opinion is furnished by us to you and is solely for your benefit, and may not be relied upon by others without our prior written consent. Our engagement with respect to the Bonds has concluded with their delivery, and we disclaim any obligation to update this opinion.

Respectfully submitted,
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CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the City of Ontario (the “City”) in connection with the issuance of the Ontario Public Financing Authority Water Revenue Bonds, Series 2024A (the “Bonds”). The Bonds are being issued pursuant to an Indenture of Trust, dated as of _____ 1, 2024 (the “Indenture”), by and between the Ontario Public Financing Authority and Zions Bancorporation, National Association, as trustee. The City covenants and agrees as follows:

1. Purpose of this Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule.

2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

Annual Report. The term “Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.

Beneficial Owner. The term “Beneficial Owner” means any person which: (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds for federal income tax purposes.

EMMA. The term “EMMA” means the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/.

Financial Obligation. The term “Financial Obligation” means a: (A) debt obligation; (B) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (C) guarantee of (A) or (B). The term “Financial Obligation” does not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule.

Fiscal Year. The term “Fiscal Year” means the one-year period ending on the last day of June of each year.

Holder. The term “Holder” means a registered owner of the Bonds.

Listed Events. The term “Listed Events” means any of the events listed in Sections 5(a) and (b) of this Disclosure Certificate.

Official Statement. The term “Official Statement” means the Official Statement relating to the Bonds dated _____, 2024 delivered in connection with the issuance of the Bonds.

Participating Underwriter. The term “Participating Underwriter” means the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. 3128
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Rule. The term “Rule” means Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

3. Provision of Annual Reports.
(a) The City shall provide not later than each March 31 following the end of its Fiscal Year (commencing March 31, 2025 with the Annual Report for Fiscal Year 2024) to EMMA an Annual Report relating to the immediately preceding Fiscal Year which is consistent with the requirements of Section 4 of this Disclosure Certificate, which Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate. (b) If the City is unable to provide to EMMA an Annual Report by the date required in subsection (a), the City shall send to EMMA a notice in substantially the manner prescribed by the Municipal Securities Rulemaking Board.

4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following:
(a) The audited financial statements of the City for the prior Fiscal Year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If such audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Principal amount of the Bonds outstanding.
(c) An update of the information substantially in the form of the following tables in the Official Statement for the Fiscal Year prior to the filing of such Annual Report:

1. Table 1 – Historical Water Supply;

2. Table 3 – Historical Water System Connections;

3. Table 5 – Ten Largest Water System Customers;

4. Table 6 – Water Commodity Rates per HCF;

5. Table 7 – Fixed Monthly Water Service Charges; and

6. Table 8 – Historical Water System Operating Results and Debt Service Coverage Fiscal Year Ended June 30.
(d) Information regarding any parity obligations entered into in the Fiscal Year prior to the filing of such Annual Report.
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Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been submitted to EMMA or the Securities and Exchange Commission; provided that if any document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board; and provided further that the City shall clearly identify each such document so included by reference.

5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not more than ten (10) Business Days after the event:

1. principal and interest payment delinquencies;

2. unscheduled draws on debt service reserves reflecting financial difficulties;

3. unscheduled draws on credit enhancements reflecting financial difficulties;

4. substitution of credit or liquidity providers, or their failure to perform;

5. issuance by the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB);

6. tender offers;

7. defeasances;

8. ratings changes;

9. bankruptcy, insolvency, receivership or similar proceedings; Note: For the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person; and

10. default, event of acceleration, termination event, modification of terms or other similar events under the terms of a Financial Obligation of the City, any of which reflect financial difficulties.
(b) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:
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1. unless described in Section 5(a)(5), other notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other events affecting the tax status of the Bonds;

2. modifications to the rights of Bondholders;

3. optional, unscheduled or contingent Bond calls;

4. release, substitution or sale of property securing repayment of the Bonds;

5. non-payment related defaults;

6. the consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms;

7. appointment of a successor or additional trustee or the change of the name of a trustee; and

8. incurrence of a Financial Obligation of the City, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the City, any of which affect security holders.
(c) If the City determines that knowledge of the occurrence of a Listed Event under Section 5(b) would be material under applicable federal securities laws, the City shall file a notice of such occurrence with EMMA in a timely manner not more than ten (10) Business Days after the event.

6. Customarily Prepared and Public Information. Upon request, the City shall provide to any person financial information and operating data regarding the City which is customarily prepared by the City and is publicly available.

7. Termination of Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).

8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that, in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted by the Rule.

9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall not 3131
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thereby have any obligation under this Disclosure Certificate to update such information or include it in any future notice of occurrence of a Listed Event.

10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, any Holders or Beneficial Owners of at least 50% aggregate principal amount of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.

No Holder or Beneficial Owner of the Bonds may institute such action, suit or proceeding to compel performance unless they shall have first delivered to the City satisfactory written evidence of their status as such, and a written notice of and request to cure such failure, and the City shall have refused to comply therewith within a reasonable time.

11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Authority, the City, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Dated: _____, 2024 CITY OF ONTARIO
By:

Its: City Manager
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INSTALLMENT PURCHASE AGREEMENT
by and between

CITY OF ONTARIO
and

ONTARIO PUBLIC FINANCING AUTHORITY
Dated as of _____ 1, 2024
Relating to
$___________

ONTARIO PUBLIC FINANCING AUTHORITY
WATER REVENUE BONDS, SERIES 2024A
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ARTICLE I

DEFINITIONS
Section 1.01. Definitions................................................................................................................1

ARTICLE II

REPRESENTATIONS AND WARRANTIES
Section 2.01. Representations and Warranties of the City.............................................................6 Section 2.02. Representations and Warranties of the Authority....................................................6

ARTICLE III
ACQUISITION OF 2024 PROJECT
Section 3.01. Acquisition and Construction of the 2024 Project...................................................7 Section 3.02. Changes to the 2024 Project ....................................................................................7 Section 3.03. Purchase and Sale of the 2024 Project.....................................................................7 Section 3.04. Title..........................................................................................................................7 Section 3.05. Acquisition Fund......................................................................................................7

ARTICLE IV
SERIES 2024 INSTALLMENT PAYMENTS
Section 4.01. Purchase Price..........................................................................................................8 Section 4.02. Series 2024 Installment Payments...........................................................................8

ARTICLE V

SECURITY
Section 5.01. Pledge of Net Revenues...........................................................................................8 Section 5.02. Allocation of Revenues............................................................................................ 9 Section 5.03. Issuance of Parity Bonds........................................................................................10 Section 5.04. Subordinate Bonds................................................................................................. 11 Section 5.05. Investments............................................................................................................ 11 Section 5.06. Rate Stabilization Fund.......................................................................................... 11

ARTICLE VI

COVENANTS OF THE CITY
Section 6.01. Compliance with Installment Purchase Agreement and Ancillary Agreements............................................................................................................ 12 Section 6.02. Against Encumbrances........................................................................................... 12 Section 6.03. Against Sale or Other Disposition of Property ...................................................... 12 Section 6.04. Against Competitive Facilities............................................................................... 12 Section 6.05. Tax Covenants ....................................................................................................... 13 Section 6.06. [Reserved].............................................................................................................. 13 Section 6.07. Maintenance and Operation of the Water System ................................................. 13 Section 6.08. Payment of Claims................................................................................................. 14 Section 6.09. Compliance with Contracts....................................................................................14 Section 6.10. Insurance................................................................................................................14 Section 6.11. Accounting Records; Financial Statements and Other Reports............................. 15 3134

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Section 6.12. Protection of Security and Rights of the Authority................................................15 Section 6.13. Payment of Taxes and Compliance with Governmental Regulations....................15 Section 6.14. Amount of Rates and Charges ...............................................................................15 Section 6.15. Collection of Rates and Charges............................................................................16 Section 6.16. Eminent Domain Proceeds.....................................................................................16 Section 6.17. Further Assurances.................................................................................................16 Section 6.18. Enforcement of Contracts......................................................................................16 Section 6.19. Continued Existence of Authority..........................................................................16

ARTICLE VII
PREPAYMENT OF SERIES 2024 INSTALLMENT PAYMENTS
Section 7.01. Prepayment ............................................................................................................17 Section 7.02. Method of Prepayment...........................................................................................17

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY
Section 8.01. Events of Default and Acceleration of Maturities ................................................. 17 Section 8.02. Application of Funds Upon Acceleration .............................................................. 18 Section 8.03. Other Remedies of the Authority........................................................................... 18 Section 8.04. Non-Waiver............................................................................................................ 19 Section 8.05. Remedies Not Exclusive ........................................................................................ 19

ARTICLE IX

DISCHARGE OF OBLIGATIONS
Section 9.01. Discharge of Obligations ....................................................................................... 19

ARTICLE X

MISCELLANEOUS
Section 10.01. Liability Limited .................................................................................................... 20 Section 10.02. Benefits of Installment Purchase Agreement Limited to Parties...........................20 Section 10.03. Successor Is Deemed Included in all References to Predecessor ..........................21 Section 10.04. Waiver of Personal Liability..................................................................................21 Section 10.05. Article and Section Headings, Gender and References .........................................21 Section 10.06. Partial Invalidity.....................................................................................................21 Section 10.07. Assignment ............................................................................................................21 Section 10.08. Net Contract........................................................................................................... 21 Section 10.09. California Law .......................................................................................................22 Section 10.10. Notices ...................................................................................................................22 Section 10.11. Effective Date ........................................................................................................22 Section 10.12. Execution in Counterparts......................................................................................22 Section 10.13. Indemnification of Authority ................................................................................. 22 Section 10.14. Amendments Permitted..........................................................................................22 Signatures .............................................................................................................................. S-1 3135

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Exhibit A Description of the 2024 Project............................................................................A-1 Exhibit B Purchase Price ......................................................................................................B-1 Exhibit C Form of Requisition from Acquisition Fund........................................................C-1 Exhibit D Form of Substitution Statement............................................................................D-1 3136
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INSTALLMENT PURCHASE AGREEMENT
This INSTALLMENT PURCHASE AGREEMENT, dated as of _____ 1, 2024, is entered into by and between the CITY OF ONTARIO, a municipal corporation that is duly organized and existing under and by virtue of the general laws of the State of California (the “City”), and the ONTARIO PUBLIC FINANCING AUTHORITY, a joint exercise of powers agency that is duly organized and existing under and by virtue of the laws of the State of California (the “Authority”).

RECITALS
A. The City proposes to finance the acquisition and construction of certain improvements, betterments, renovations and expansions of facilities within its Water System, as described in Exhibit A (collectively, the “2024 Project”).

B. The Authority has agreed to assist the City in financing the 2024 Project on the terms and conditions that are set forth herein.

C. The Authority is authorized by Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California, including but not limited to Section 6540 et seq., to finance and refinance the acquisition and construction of property for its members.

D. The City is authorized by the laws of the State of California to acquire the 2024 Project.

E. The City and the Authority have duly authorized the execution of this Installment Purchase Agreement.

F. All acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Installment Purchase Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Installment Purchase Agreement.

NOW, THEREFORE, IN CONSIDERATION OF THESE PREMISES AND OF THE

MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER

VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS:

ARTICLE I

DEFINITIONS
Section 1.01. Definitions. Unless the context otherwise requires, the terms that are defined in this section shall for all purposes hereof and of any amendment hereof or supplement hereto and of any report or other document that is mentioned herein or therein have the meanings that are defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms that are defined herein. All capitalized terms that are used herein and not defined herein shall have the meanings that are ascribed thereto in the Indenture. 3137
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Accountant’s Report. The term “Accountant’s Report” means a report signed by an Independent Certified Public Accountant.

Acquisition Fund. The term “Acquisition Fund” means the fund by that name created pursuant to Section 3.04 of the Indenture.

Authority. The term “Authority” means Ontario Public Financing Authority, a joint exercise of powers agency that is duly organized pursuant to the JPA Agreement and existing under and by virtue of the laws of the State of California.

Charges. The term “Charges” means fees, assessments, rates and charges prescribed by the City Council for the services and facilities of the Water System furnished by the City.

City. The term “City” means City of Ontario, a municipal corporation that is duly organized and existing under and by virtue of the general laws of the State of California.

City Manager. The term “City Manager” means the City Manager of the City, or any other person that is designated by the City Manager to act on behalf of the City Manager.

Debt Service. The term “Debt Service” means, for any Fiscal Year, the sum of:
(1) the interest payable during such Fiscal Year on all outstanding Parity Bonds, assuming that all outstanding serial Parity Bonds are retired as scheduled and that all outstanding term Parity Bonds are prepaid or paid from sinking fund payments as scheduled (except to the extent that such interest is capitalized); (2) that portion of the principal amount of all outstanding serial Parity Bonds maturing in such Fiscal Year, but excluding Excluded Principal; (3) that portion of the principal amount of all outstanding term Parity Bonds required to be prepaid or paid in such Fiscal Year, but excluding Excluded Principal; and (4) that portion of the interest payments to be made hereunder payable during such Fiscal Year (except to the extent that such interest is capitalized); provided that, as to any such Parity Bonds or the Series 2024 Installment Payments bearing or comprising interest at other than a fixed rate, the rate of interest used to calculate Debt Service shall, for all purposes, be assumed to be a fixed rate equal to the average variable rate borne over the preceding twelve (12) months by outstanding variable rate debt issued or executed by the City or, if no such variable rate debt is at the time outstanding, by variable rate debt of which the interest rate is computed by reference to an index that is comparable to that to be utilized in determining the interest rate for the debt then proposed to be issued; and
provided further that, if any series or issue of such Parity Bonds or the Series 2024 Installment Payments have twenty-five percent (25%) or more of the aggregate principal amount of such series or issue due in any one year, Debt Service shall be determined for the Fiscal Year of determination as if the principal of and interest on such series or issue of such Parity Bonds or Bonds were being paid from the date of incurrence thereof in substantially equal annual amounts over a period of twentyfive (25) years from the date of calculation; and 3138
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provided further that, as to any such Parity Bonds or Bonds or portions thereof bearing no interest but which are sold at a discount and which discount accretes with respect to such Parity Bonds or Bonds or portions thereof, such accreted discount shall be treated as interest in the calculation of Debt Service; and
provided further that the amount on deposit in a debt service reserve fund on any date of calculation of Debt Service shall be deducted from the amount of principal due at the final maturity of the Parity Bonds and Bonds for which such debt service reserve fund was established and in each preceding year until such amount is exhausted.

Excluded Principal. The term “Excluded Principal” means each payment of principal of any Parity Bond: (1) which is commercial paper or otherwise of a revolving or short-term nature and has a maturity of less than 42 months; and (2) for which a certificate of an authorized representative of the City has been prepared to the effect that the City intends to pay such principal from the proceeds of Parity Bonds. No such determination shall affect the security for such Parity Bonds or the obligation of the City to pay such Parity Bonds from the sources set forth in the applicable resolution or contract.

Event of Default. The term “Event of Default” means an event that is described in Section 8.01.

Fiscal Year. The term “Fiscal Year” means the twelve month period beginning on July 1 of each year and ending on the next succeeding June 30, both dates inclusive, or any other twelve month period hereafter selected and designated as the official fiscal year period of the City.

Gross Revenues. The term “Gross Revenues” means all income, rents, rates, fees, charges and other moneys derived from the ownership of or operation of the Water System, including, without limiting the generality of the foregoing: (1) all in lieu charges and groundwater augmentation charges (including investment earnings thereon) collected by or on behalf of the City; (2) all income, rents, rates, fees, charges, business interruption insurance proceeds or other moneys derived by the City from the sale, furnishing and supplying of the water, drainage or other services, facilities, and commodities sold, furnished or supplied through the facilities of or in the conduct or operation of the business of the Water System, including connection fees, capacity charges and other charges for the connection of additional customers to the Water System; (3) the earnings on and income derived from the investment of such income, rents, rates, fees, charges, proceeds or other moneys, including City reserves; and (4) deposits to the Revenue Fund from amounts on deposit in the Rate Stabilization Fund in accordance with Section 5.06, but excluding in all cases: (v) development impact fees imposed pursuant to California Government Code § 66000 et seq.; (w) customers’ deposits or any other deposits or advances subject to refund until such deposits or advances have become the property of the City; (x) proceeds of taxes or benefit assessments restricted by law to be used by the City to pay amounts due on bonds or other obligations hereafter incurred; (y) any and all revenues derived from the ownership or operation of or in connection with, and pledged to, Separate Facilities; and (z) any Gross Revenues transferred from the Revenue Fund to the Rate Stabilization Fund in accordance with Section 5.02(e).

Indenture. The term “Indenture” means the Indenture of Trust, dated as of the date hereof, by and between the City and the Authority, relating to the 2024 Bonds. 3139
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Independent Certified Public Accountant. The term “Independent Certified Public Accountant” means any firm of certified public accountants that is appointed by the City, and each of whom is independent pursuant to the Statement on Auditing Standards No. 1 of the American Institute of Certified Public Accountants.

Independent Consultant. The term “Independent Consultant” means a financial consultant or firm of such consultants that is appointed by the City, and who, or each of whom: (1) is in fact independent and not under domination of the City; (2) does not have any substantial interest, direct or indirect, with the City; (3) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make reports to the City; and (4) is registered as a “municipal advisor,” as defined in Section 15B of the Securities Exchange Act of 1934, as amended.

Installment Purchase Agreement. The term “Installment Purchase Agreement” means this Installment Purchase Agreement, dated as of _____ 1, 2024, by and between the City and the Authority, as originally executed and as it may from time to time be amended or supplemented in accordance herewith.

JPA Agreement. The term “JPA Agreement” means the Joint Exercise of Powers Agreement, dated as of June 1, 2013, by and between the City and the Ontario Housing Authority, pursuant to which the Authority is established, as amended.

Maintenance and Operation Costs. The term “Maintenance and Operation Costs” means the reasonable and necessary costs spent or incurred by the City for maintaining and operating the Water System, calculated in accordance with sound accounting principles, and all reasonable and necessary expenses of management and repair and other expenses to maintain and preserve the Water System in good repair and working order, and including all reasonable and necessary administrative costs of the City attributable to the Water System and the Series 2024 Installment Payments, such as salaries and wages and the necessary contribution to retirement of employees, overhead, insurance, taxes (if any), expenses, compensation and indemnification of the Trustee, and fees of auditors, accountants, attorneys or engineers, and including all other reasonable and necessary costs of the City or charges required to be paid by it to comply with the terms of this Installment Purchase Agreement, but excluding (i) depreciation, replacement and obsolescence charges or reserves therefor and amortization of intangibles or other bookkeeping entries of a similar nature, (ii) payment of debt service on Parity Bonds or Subordinate Bonds, (iii) capital additions, replacements, betterments, extensions, or improvements to the Water System and (iv) charges payable to the City for a pipeline and right of way fee.

Net Proceeds. The term “Net Proceeds” means, when used with reference to any insurance or condemnation award or sale of property, means the gross proceeds from the sale of property or insurance or condemnation award with respect to which that term is used remaining after payment of all expenses (including attorneys’ fees and any extraordinary expenses of the Trustee) incurred in the collection of such gross proceeds.

Net Revenues. The term “Net Revenues” means, for any period of computation, the amount of the Gross Revenues received from the Water System during such period, less the amount of Maintenance and Operation Costs of the Water System becoming payable during such period.

Parity Bonds. The term “Parity Bonds” means all bonds, notes or other obligations (including without limitation long-term contracts, loans, sub-leases or other legal financing 3140
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arrangements) of the City payable from and secured by a pledge of and lien upon any of the Net Revenues issued or incurred pursuant to Section 5.03.

Parity Bonds Instrument. The term “Parity Bonds Instrument” means the resolution, trust indenture or installment sale agreement adopted, entered into or executed and delivered by the City, and under which Parity Bonds are issued.

Purchase Price. The term “Purchase Price” means the principal amount plus interest thereon owed by the City to the Authority under the terms hereof as provided in Section 4.01.

Rate Stabilization Fund. The term “Rate Stabilization Fund” means the fund by that name held by the City and established pursuant to Section 5.06.

Revenue Fund. The term “Revenue Fund” means the fund by that name held by the City as set forth in Section 5.02 hereof.

Separate Facilities. The term “Separate Facilities” means any capital items acquired on or after the date hereof and which were not financed from the proceeds of Parity Bonds or other obligations of the Water System of the City having a parity claim on the Revenue Fund or Gross Revenues.

Series 2024 Installment Payment Date. The term “Series 2024 Installment Payment Date” means the fifteenth day of May and November of each year commencing on _____ 15, 20__.

Series 2024 Installment Payments. The term “Series 2024 Installment Payments” means the Installment Payments scheduled to be paid by the City under and pursuant to the Installment Purchase Agreement.

Subordinate Bonds. The term “Subordinate Bonds” means all bonds, notes or other obligations (including without limitation long-term contracts, loans, sub-leases or other legal financing arrangements) of the City payable from and secured by a pledge of and lien upon any of the Net Revenues, subordinate to the pledge of Net Revenues to pay the Series 2024 Installment Payment and any Parity Debt, and issued or incurred pursuant to Section 5.03.

Subordinate Bonds Instrument. The term “Subordinate Bonds Instrument” means the resolution, trust indenture or installment sale agreement adopted, entered into or executed and delivered by the City, and under which Subordinate Bonds are issued.

Trustee. The term “Trustee” means Zions Bancorporation, National Association, acting in its capacity as Trustee under and pursuant to the Indenture, and its successors and assigns. 2024 Project. The term “2024 Project” means the additions, betterments, extensions and improvements to the City’s Water System facilities, including real property and buildings, if any, which are described as such in Exhibit A.
2024 Bonds. The term “2024 Bonds” means the Ontario Public Financing Authority Water Revenue Bonds, Series 2024A issued pursuant to the Indenture. 3141
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Water System. The term “Water System” means the existing potable and recycled water system of the City, comprising all facilities for the acquisition, storage, treatment and distribution of water for residential, commercial and industrial uses in the City.

ARTICLE II

REPRESENTATIONS AND WARRANTIES
Section 2.01. Representations and Warranties of the City. The City makes the following representations:
(a) The City is a municipal corporation that is duly organized and existing under and pursuant to the general laws of the State of California. (b) The City has full legal right, power and authority to enter into this Installment Purchase Agreement, carry out its obligations hereunder and carry out and consummate all other transactions that are contemplated by this Installment Purchase Agreement, and the City has complied with the provisions of the laws of the State of California in all matters relating to such transactions.
(c) By proper action, the City has duly authorized the execution, delivery and due performance of this Installment Purchase Agreement.
(d) The City will not take or, to the extent within its power, permit any action to be taken which results in the interest that is paid for the installment purchase of the 2024 Project under the terms of this Installment Purchase Agreement being included in the gross income of the Authority or its assigns for purposes of federal or State of California personal income taxation. (e) The City has determined that it is necessary and proper for City uses and purposes within the terms of the laws of the State of California that the City finance and acquire the 2024 Project in the manner that is provided for in this Installment Purchase Agreement in order to provide essential services and facilities to persons residing in the City.

Section 2.02. Representations and Warranties of the Authority. The Authority makes the following representations and warranties:
(a) The Authority is a joint exercise of powers agency that is duly organized under the JPA Agreement and in good standing under the laws of the State of California, has full legal right, power and authority to enter into this Installment Purchase Agreement and to carry out and consummate all transactions that are contemplated by this Installment Purchase Agreement and by proper action has duly authorized the execution and delivery and due performance of this Installment Purchase Agreement.
(b) The execution and delivery of this Installment Purchase Agreement and the consummation of the transactions that are contemplated herein will not violate any provision of law, any order of any court or other agency of government, or any indenture, material agreement or other instrument to which the Authority is now a party or by which it or any of its properties or assets is bound, or be in conflict with, result in a breach of or constitute a default (with due notice or the passage of time or both) under any such indenture, agreement or other instrument, or result in the 3142
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creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Authority.
(c) The Authority will not take or permit any action to be taken which results in the interest that is paid for the installment purchase of the 2024 Project under the terms of this Installment Purchase Agreement being included in the gross income of the Authority or its assigns for purposes of federal or State of California personal income taxation.

ARTICLE III
ACQUISITION OF 2024 PROJECT
Section 3.01. Acquisition and Construction of the 2024 Project. The Authority hereby agrees to cause the 2024 Project, and any additions or modifications thereto, to be constructed, acquired or installed by the City as its agent, and the City shall enter into contracts and provide for, as agent of the Authority, the complete acquisition of the 2024 Project. The City hereby agrees that it will cause the construction, acquisition and installation of the 2024 Project to be diligently performed after the deposit of funds pursuant to Section 3.02 of the Indenture, upon satisfactory completion of design work and compliance with the California Environmental Quality Act and approval by the City Council of the City, unforeseeable delays beyond the reasonable control of the City only excepted. It is hereby expressly understood and agreed that the Authority shall be under no liability of any kind or character whatsoever for the payment of any cost of the 2024 Project and that all such costs and expenses shall be paid by the City, regardless of whether the funds deposited in the Acquisition Fund are sufficient to cover all such costs and expenses.

Section 3.02. Changes to the 2024 Project. The City may substitute other improvements for those listed as components of the 2024 Project in Exhibit A, but only if the City first files with the Trustee a statement of the City in the form set forth in Exhibit D.

Section 3.03. Purchase and Sale of the 2024 Project. In consideration for the Series 2024 Installment Payments as set forth in Section 4.02, the Authority agrees to sell, and hereby sells, to the City, and the City agrees to purchase, and hereby purchases, from the Authority, the 2024 Project at the purchase price specified in Section 4.01 hereof and otherwise in the manner and in accordance with the provisions of this Installment Purchase Agreement.

Section 3.04. Title. All right, title and interest in each component of the 2024 Project shall vest in the City immediately upon acquisition or construction thereof. Such vesting shall occur without further action by the Authority or the City, and the Authority shall, if requested by the City or if necessary to assure such automatic vesting, deliver any and all documents which are required to assure such vesting.

Section 3.05. Acquisition Fund. There has been established with the Trustee pursuant to the Indenture the Acquisition Fund. The moneys in the Acquisition Fund shall be held by the Trustee in trust and applied to the payment of the costs of acquisition and construction of the 2024 Project and of expenses incidental thereto. Before any payment is made from the Acquisition Fund by the Trustee, the City Manager of the City, acting as agent of the Authority, shall cause to be filed with the Trustee a certificate of the City in the form set forth in Exhibit C. 3143
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ARTICLE IV
SERIES 2024 INSTALLMENT PAYMENTS
Section 4.01. Purchase Price.
(a) The Purchase Price to be paid by the City hereunder to the Authority is the sum of the principal amount of the City’s obligations hereunder plus the interest to accrue on the unpaid balance of such principal amount from the effective date hereof over the term hereof, subject to prepayment as provided in Article VII.
(b) The principal amount of the payments to be made by the City hereunder is set forth in Exhibit B.
(c) The interest to accrue on the unpaid balance of such principal amount is as specified in Section 4.02 and Exhibit B, and shall be paid by the City as and constitute interest paid on the principal amount of the City’s obligations hereunder.

Section 4.02. Series 2024 Installment Payments. The City shall, subject to its rights of prepayment provided in Article VII, pay the Authority the Purchase Price in installment payments of interest and principal in the amounts and on the Series 2024 Installment Payment Dates as set forth in Exhibit B.

Each Series 2024 Installment Payment shall be paid to the Authority in lawful money of the United States of America. In the event that the City fails to make any of the payments which are required to be made by it under this section, such payment shall continue as an obligation of the City until such amount shall have been fully paid, and the City agrees to pay the same with interest accruing thereon at the rate or rates of interest then applicable to the remaining unpaid principal balance of the Series 2024 Installment Payments if paid in accordance with their terms.

The obligation of the City to make the Series 2024 Installment Payments is absolute and unconditional, and until such time as the Purchase Price shall have been paid in full (or provision for the payment thereof shall have been made pursuant to Article IX), the City will not discontinue or suspend any Series 2024 Installment Payment which is required to be made by it under this section when due, whether or not the Water System or any part thereof is operating or operable or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and whether or not the 2024 Project has been completed, and such payments shall not be subject to reduction whether by offset or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement for any cause whatsoever.

ARTICLE V

SECURITY
Section 5.01. Pledge of Net Revenues. The City hereby transfers, places a charge upon, assigns and sets over to the Authority, all of the Net Revenues and all amounts in the Rate Stabilization Fund which are necessary to pay the Series 2024 Installment Payments in any Fiscal Year, and such portion of the Net Revenues is hereby irrevocably pledged to the punctual payment of the Series 2024 Installment Payments. The Net Revenues shall not be used for any other purpose 3144
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while any of the Series 2024 Installment Payments remain unpaid, except that out of Net Revenues there may be apportioned and paid such sums for such purposes, as are expressly permitted by this Article. Said pledge shall constitute a first, direct and exclusive charge and lien on the Net Revenues and amounts in the Rate Stabilization Fund for the payment of the Series 2024 Installment Payments and all other Parity Bonds in accordance with the terms hereof.

Section 5.02. Allocation of Revenues. The City has heretofore established the Revenue Fund, which the City agrees to continue to hold and maintain for the purposes and uses set forth herein. The City covenants and agrees that all Gross Revenues, when and as received, will be received and held by the City in trust hereunder and will be deposited by the City in the Revenue Fund and will be accounted for through and held in trust in the Revenue Fund, and the City shall only have such beneficial right or interest in any of such money as provided herein. All such Gross Revenues shall be transferred, disbursed, allocated and applied solely to the uses and purposes hereinafter in this Article set forth, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the City.
(a) Operating Costs. The City shall first pay from the moneys in the Revenue Fund the Maintenance and Operation Costs as such Maintenance and Operation Costs become due and payable. Thereafter, all remaining moneys in the Revenue Fund shall be set aside by the City for the transfer to the Trustee at least five days prior to each Series 2024 Installment Payment Date; and all such moneys shall be held in trust and shall be applied, used and withdrawn only for the purposes set forth in this Section
(b) Bond Payment Fund. Not later than three Business Days preceding each Series 2024 Installment Payment Date, the City shall, from remaining moneys in the Revenue Fund, transfer to the Trustee for deposit in the Bond Payment Fund an amount that is equal to the interest and principal payable and coming due on the 2024 Bonds on the next succeeding Interest Payment Date.

The City shall also, from the moneys in the Revenue Fund, transfer to the applicable trustee for deposit in the applicable payment fund, without preference or priority, and in the event of any insufficiency of such moneys ratably without any discrimination or preference, any other Debt Service or payments in accordance with the provisions of the applicable Parity Bonds Instrument.

Any moneys which are on deposit in the Bond Payment Fund on each Series 2024 Installment Payment Date (other than amounts that are required for the payment of past due principal or interest with respect to any 2024 Bonds not presented for payment) shall be credited to the payment of the Series 2024 Installment Payments due and payable on such date. No deposit need be made in the Bond Payment Fund as Series 2024 Installment Payments if the amount in the Bond Payment Fund is at least equal to the amount of the Series 2024 Installment Payment that is due and payable on the next succeeding Series 2024 Installment Payment Date. (c) Reserve Funds. On or before each Series 2024 Installment Payment Date, the City shall, from remaining moneys in the Revenue Fund, thereafter, without preference or priority, and in the event of any insufficiency of such moneys ratably without any discrimination or preference, transfer to the applicable trustee for deposit to reserve funds or accounts established for Parity Bonds an amount that is equal to the amount required to be deposited therein. (d) Subordinate Bonds. After making the payments, allocations or transfers provided for in subsections (a) through (c) above, the City shall, from the remaining moneys in the Revenue Fund, thereafter, without preference or priority and in the event of any insufficiency of such moneys ratably 3145
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without any discrimination or preference, transfer to the applicable trustee for deposit in the respective payment fund, without preference or priority, and in the event of any insufficiency of such moneys ratably without any discrimination or preference, any debt service on Subordinate Bonds. (e) Surplus. As long as all of the foregoing payments, allocations and transfers are made at the times and in the manner set forth above in subsections (a) through (d), any moneys remaining in the Revenue Fund may at any time be treated as surplus and applied by the City for any lawful purpose, including but not limited to transfers to the Rate Stabilization Fund.

Section 5.03. Issuance of Parity Bonds. In addition to the Series 2024 Installment Payments, the City may, by Parity Bonds Instrument, issue Parity Bonds, to provide financing for the Water System, in such principal amount as shall be determined by the City. The City may issue or incur any such Parity Bonds subject to the following specific conditions, which are hereby made conditions precedent to the issuance and delivery of such Parity Bonds:
(a) The City shall be in compliance with all covenants set forth in this Installment Purchase Agreement
(b) The Net Revenues of the Water System, calculated on sound accounting principles, as shown by the books of the City for the latest Fiscal Year or designated twelve-month period, plus, at the option of the City, any or all of the items hereinafter in this paragraph designated (i) and (ii), shall at least equal one hundred twenty-five percent (125%) of Debt Service with respect to the Series 2024 Installment Payments plus the Debt Service which would have accrued had the Parity Bonds been executed at the beginning of such Fiscal Year or designated twelve (12) month period. The items any or all of which may be added to such Net Revenues for the purpose of issuing or incurring Parity Bonds hereunder are the following:
(1) Based on the report of an Independent Consultant, an allowance for Net Revenues from any additions to or improvements or extensions of the Water System to be made with the proceeds of such Parity Bonds, and also for Net Revenues from any such additions, improvements or extensions which have been made from moneys from any source but in any case which, during all or any part of such Fiscal Year, were not in service, all in an amount equal to ninety percent (90%) of the estimated additional average annual Net Revenues to be derived from such additions, improvements and extensions for the first thirty-six (36) month period in which each addition, improvement or extension is respectively to be in operation; and (2) Based on the report of an Independent Consultant, an allowance for earnings arising from any increase in the Charges which has become effective prior to the incurring of such additional indebtedness but which, during all or any part of such Fiscal Year, was not in effect, in an amount equal to the amount by which the Net Revenues would have been increased if such increase in Charges had been in effect during the whole of such Fiscal Year. (c) The Parity Bonds Instrument providing for the issuance of such Parity Bonds under this Section 5.03 shall provide that:
(1) The proceeds of such Parity Bonds shall be applied to the acquisition, construction, improvement, financing or refinancing of additional facilities, improvements or extensions of existing facilities within the Water System, or otherwise for facilities, improvements or property which the City determines are of benefit to the Water System, or for the purpose of 3146
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refunding any Series 2024 Installment Payments or Parity Bonds in whole or in part, including all costs (including costs of issuing such Parity Bonds and including capitalized interest on such Parity Bonds during any period which the City deems necessary or advisable) relating thereto; (2) Interest on such Parity Bonds shall be payable on a Series 2024 Installment Payment Date unless such Parity Bonds are owed to an agency of the State of California, in which case they may be payable on any date;
(3) The principal of such Parity Bonds shall be payable on August 1 in any year in which principal is payable unless such Parity Bonds are owed to an agency of the State of California, in which case they may be payable on any date; and (4) Money or a surety bond may be, but shall not be required to be, deposited in a reserve account for such Parity Bonds from the proceeds of the sale of such Parity Bonds or otherwise in such amount as may be determined by the City.

Section 5.04. Subordinate Bonds. Nothing in this Installment Purchase Agreement shall prohibit or impair the authority of the City to issue bonds or other obligations secured by a lien on Gross Revenues or Net Revenues which is subordinate to the lien established hereunder, upon such terms and in such principal amounts as the City may determine.

Section 5.05. Investments. All moneys which are held by the City in the Revenue Fund and the Rate Stabilization Fund shall be invested in Permitted Investments, and the investment earnings thereon shall remain on deposit in such fund, except as otherwise provided herein.

Section 5.06. Rate Stabilization Fund. There is hereby established with the City a fund to be known as the “Rate Stabilization Fund.” The City hereby agrees and covenants to maintain, so long as any 2024 Bonds remain outstanding, the Rate Stabilization Fund. There is $0 on deposit in the Rate Stabilization Fund as of the date of the initial issuance of the 2024 Bonds. The City may deposit amounts therein from time to time in its sole discretion.

Amounts in the Rate Stabilization Fund shall be disbursed, allocated and applied by the City solely to the uses and purposes hereinafter described in this Installment Purchase Agreement, and shall be accounted for separately and apart from all other accounts, funds, money or other resources of the City.

The Rate Stabilization Fund and all amounts on deposit therein are hereby irrevocably pledged to the payment of the Series 2024 Installment Payments and Parity Bonds as provided herein; provided that amounts on deposit in the Rate Stabilization Fund may be apportioned for such purposes as are expressly permitted herein. This pledge shall constitute a first lien on amounts on deposit in the Rate Stabilization Fund for the payment of Series 2024 Installment Payments and Parity Bonds in accordance with the terms hereof.

ARTICLE VI

COVENANTS OF THE CITY
Section 6.01. Compliance with Installment Purchase Agreement and Ancillary Agreements.

The City will punctually pay the Series 2024 Installment Payments in strict conformity with the terms hereof, and will faithfully observe and perform all of the agreements, conditions, covenants and terms contained herein which are required to be observed and performed by it, and will not terminate the Installment Purchase Agreement for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the 2024 Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State of California or any political subdivision of either or any failure of the Authority to observe or perform any agreement, condition, covenant or term which is contained herein and required to be observed and performed by it, whether express or implied, or any duty, liability or obligation arising out of or connected herewith or the insolvency, or deemed insolvency, or bankruptcy or liquidation of the Authority or any force majeure, including acts of God, tempest, storm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo, strikes, industrial disputes, lock outs, lack of transportation facilities, fire, explosion or acts or regulations of governmental authorities.

The City will faithfully observe and perform all of the agreements, conditions, covenants and terms which are required to be observed and performed by it pursuant to all outstanding Parity Bonds as such may from time to time be executed or issued, as the case may be.

Section 6.02. Against Encumbrances. The City will not make any pledge of or place any lien on Net Revenues or moneys in the Rate Stabilization Fund except as provided herein.

Section 6.03. Against Sale or Other Disposition of Property. The City will not sell, lease, transfer, encumber or otherwise dispose of the Water System or any material portion thereof or enter into any agreement or lease which impairs the operation of the Water System or any part thereof which is necessary to secure adequate Net Revenues for the payment of the Series 2024 Installment Payments, or which would otherwise impair the rights of the Authority hereunder or the operation of the Water System. Any real or personal property which has become nonoperative or which is not needed for the efficient and proper operation of the Water System, or any material or equipment which has become worn out, may be sold if such sale will not impair the ability of the City to pay the Series 2024 Installment Payments and if the proceeds of such sale are deposited in the Revenue Fund.

Nothing herein shall restrict the ability of the City to sell any portion of the Water System if such portion is immediately repurchased by the City and if such arrangement cannot by its terms result in the purchaser of such portion of the Water System exercising any remedy which would deprive the City of or otherwise interfere with its right to own and operate such portion of the Water System.

Section 6.04. Against Competitive Facilities. The City will not, to the extent permitted by law, acquire, construct, maintain or operate and will not, to the extent permitted by law and within the scope of its powers, permit any other public or private agency, corporation, district or political subdivision or any person whomsoever to acquire, construct, maintain or operate within the City any water system competitive with the Water System.
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Section 6.05. Tax Covenants. Notwithstanding any other provision of the Installment Purchase Agreement, absent an opinion of Bond Counsel that the exclusion from gross income of the interest on the 2024 Bonds will not be adversely affected for federal income tax purposes, the City covenants to comply with all applicable requirements of the Code which are necessary to preserve such exclusion from gross income with respect to the 2024 Bonds and specifically covenants, without limiting the generality of the foregoing, as follows:
(a) Private Activity. The City will take no action and refrain from taking any action, and the City will make no use of the proceeds of the 2024 Bonds or of any other moneys or property, which would cause the 2024 Bonds to be “private activity bonds” within the meaning of Section 141 of the Code;
(b) Arbitrage. The City will make no use of the proceeds of the 2024 Bonds or of any other amounts or property, regardless of the source, and the City will not take any action or refrain from taking any action, which will cause the 2024 Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code;
(c) Federal Guarantee. The City will make no use of the proceeds of the 2024 Bonds, and the City will not take or omit to take any action, that would cause the 2024 Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code; (d) Information Reporting. The City will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Code which is necessary to preserve the exclusion of interest on the 2024 Bonds pursuant to Section 103(a) of the Code;
(e) Hedge Bonds. The City will make no use of the proceeds of the 2024 Bonds or any other amounts or property, regardless of the source, and the City will not take any action and refrain from taking any action, that would cause the 2024 Bonds to be considered “hedge bonds” within the meaning of Section 149(g) of the Code unless the City takes all necessary action to assure compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income of interest on the 2024 Bonds for federal income tax purposes; and (f) Miscellaneous. The City will not take any action or refrain from taking any action which is inconsistent with its expectations stated in the Tax Certificate executed by the City in connection with the issuance of the 2024 Bonds and will comply with the covenants and requirements that are stated therein and incorporated by reference herein.

This section and the covenants that are set forth herein shall not be applicable to, and nothing that is contained herein shall be deemed to prevent the City from causing the Authority to issue revenue bonds or issuing bonds or executing and delivering contracts that are payable on a parity with the 2024 Bonds, the interest with respect to which has been determined to be subject to federal income taxation.

Section 6.06. [Reserved].

Section 6.07. Maintenance and Operation of the Water System. The City will maintain and preserve the Water System in good repair and working order at all times, operate the Water System 3149
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in an efficient and economical manner and pay all Maintenance and Operation Costs as they become due and payable.

Section 6.08. Payment of Claims. The City will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien on the Net Revenues or the funds or accounts created hereunder or under the Indenture or on any funds in the hands of the City which are pledged to pay the Series 2024 Installment Payments or the Series 2024 Bonds, or which might impair the security of the Series 2024 Installment Payments.

Section 6.09. Compliance with Contracts. The City will comply with, keep, observe and perform all agreements, conditions, covenants and terms, express or implied, which are required to be performed by it contained in all contracts for the use of the Water System and all other contracts affecting or involving the Water System, to the extent that the City is a party thereto.

Section 6.10. Insurance.
(a) The City will procure and maintain or cause to be procured and maintained insurance on the Water System, excluding coverage for earthquake damage or destruction, with responsible insurers in such amounts and against such risks (including accident to or destruction of the Water System) as are usually covered in connection with facilities that are similar to the Water System, so long as such insurance is available at reasonable rates.

In the event of any damage to or destruction of the Water System caused by the perils covered by such insurance, the Net Proceeds thereof shall be applied to the reconstruction, repair or replacement of the damaged or destroyed portion of the Water System. The City shall begin such reconstruction, repair or replacement promptly after such damage or destruction shall occur, and shall continue and properly complete such reconstruction, repair or replacement as expeditiously as possible, and shall pay out of such Net Proceeds all costs and expenses in connection with such reconstruction, repair or replacement so that the same shall be completed and the Water System shall be free and clear of all claims and liens. The City covenants to reconstruct, repair or replace the damaged or destroyed portions of the Water System promptly if a failure to reconstruct, repair or replace such portions would impair or adversely affect the ability of the City to pay the Series 2024 Installment Payments.
(b) The City will procure and maintain such other insurance which it shall deem advisable or necessary to protect its interests and the interests of the Authority, which insurance shall afford protection in such amounts and against such risks as are usually covered in connection with municipal water systems similar to the Water System.
(c) Any insurance that is required to be maintained by paragraph (a) above and, if the City determines to procure and maintain insurance pursuant to paragraph (b) above, such insurance, may be maintained under a self-insurance program so long as such self-insurance is maintained in the amounts and manner usually maintained in connection with water systems similar to the Water System, and is, in the opinion of an accredited actuary, actuarially sound.

All policies of insurance which are required to be maintained herein shall provide that the Authority or its assignee shall be given thirty (30) days’ written notice of any intended cancellation thereof or reduction of coverage provided thereby.
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Annually on or before September 1 in each year, the Authority shall provide the Trustee with a Certificate stating that the City is in full compliance with the provisions of this section. The Trustee is entitled to rely on any such Certificate as to the City’s compliance with these provisions, and the Trustee has no further duties in that regard.

Section 6.11. Accounting Records; Financial Statements and Other Reports. (a) The City will keep appropriate accounting records in which complete and correct entries shall be made of all transactions relating to the Water System, which records shall be available for inspection by the Authority and the Trustee at reasonable hours and under reasonable conditions.
(b) The City will prepare and file with the Authority or its assignee, annually within two hundred ten (210) days after the close of each Fiscal Year (commencing with the Fiscal Year ended June 30, 2024) financial statements of the City for the preceding Fiscal Year prepared in accordance with generally accepted accounting principles, together with an Accountant’s Report thereon. The Trustee shall have no obligation to review any such financial statements.

Section 6.12. Protection of Security and Rights of the Authority. The City will preserve and protect the security hereof and the rights of the Authority to the Series 2024 Installment Payments hereunder and will warrant and defend such rights against all claims and demands of all persons.

Section 6.13. Payment of Taxes and Compliance with Governmental Regulations. The City will pay and discharge all taxes, assessments and other governmental charges which may hereafter be lawfully imposed upon the Water System or any part thereof, or upon the Net Revenues when the same shall become due. The City will duly observe and conform with all valid regulations and requirements of any governmental authority relative to the operation of the Water System, or any part thereof, but the City shall not be required to comply with any regulations or requirements so long as the validity or application thereof shall be contested in good faith.

Section 6.14. Amount of Rates and Charges.
(a) The City shall, to the fullest extent permitted by law, fix, prescribe, revise and collect Charges for the Water System during each Fiscal Year which are reasonably expected, at the commencement of each Fiscal Year, to be at least sufficient, after making allowances for contingencies and error in the estimates, to pay the following amounts in the following order:
(1) all Maintenance and Operation Costs of the Water System estimated by the City to become due and payable in such Fiscal Year; (2) the Debt Service on the Series 2024 Installment Payments and any Parity Bonds;
(3) all other payments required for compliance with this Installment Purchase Agreement and the Parity Bonds Instruments pursuant to which any Parity Bonds relating to the Water System shall have been issued; and
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(4) all payments required to meet any other obligations of the City which are charges, liens, encumbrances upon or payable from the Gross Revenues of the Water System or the Net Revenues of the Water System.
(b) In addition, the City shall fix, prescribe, revise and collect Charges for the Water System during each Fiscal Year which are sufficient to yield Net Revenues of the Water System at least equal to one hundred percent (100%) of the amounts payable under the preceding clause (a)(2) in such Fiscal Year for the Series 2024 Installment Payments and Parity Bonds which have a lien on such Net Revenues.
(c) In addition, the City shall fix, prescribe, revise and collect Charges for the Water System (inclusive of all Gross Revenues) during each Fiscal Year which are sufficient to yield Net Revenues of the Water System at least equal to one hundred twenty-five percent (125%) of the amounts payable under the preceding clause (a)(2) in such Fiscal Year for the Series 2024 Installment Payments and Parity Bonds which have a lien on such Net Revenues.

Section 6.15. Collection of Rates and Charges. The City will have in effect at all times bylaws, rules and regulations requiring each customer to pay the Charges applicable to the water service from the Water System to such customer’s land and providing for the billing thereof and for a due date and a delinquency date for each bill. In each case where such bill remains unpaid in whole or in part after it becomes delinquent, the City may discontinue such service from the Water System, and such service shall not thereafter be recommenced except in accordance with City bylaws or rules, regulations and the laws of the State of California governing such situations of delinquency.

Section 6.16. Eminent Domain Proceeds. If all or any part of the Water System shall be taken by eminent domain proceedings, the Net Proceeds thereof shall be applied either to additions, betterments, extensions or improvements to the Water System or, if the City elects not to apply such Net Proceeds to such capital items or if such Net Proceeds are not fully expended for such purposes, such Net Proceeds which are not required by the City for such purposes will be deposited in the Revenue Fund.

Section 6.17. Further Assurances. The City will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Authority of the rights and benefits provided to it herein.

Section 6.18. Enforcement of Contracts. So long as any of the 2024 Bonds are outstanding, the City will not voluntarily consent to or permit any rescission of, nor will it consent to any amendment to or otherwise take any action under or in connection with any contracts previously or hereafter entered into if such rescission or amendment would in any manner impair or adversely affect the ability of the City to pay principal of and interest on the 2024 Bonds.

Section 6.19. Continued Existence of Authority. The City and the Authority will take or cause to be taken all actions reasonably necessary to continue the Authority’s existence until such time as the 2024 Bonds are no longer Outstanding under the Indenture, including but not limited to the addition of one or more new members to the Authority and execution of the JPA Agreement pursuant to which the Authority was created by such new members. 3152
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ARTICLE VII
PREPAYMENT OF SERIES 2024 INSTALLMENT PAYMENTS
Section 7.01. Prepayment.
(a) The City may prepay the Series 2024 Installment Payments as a whole, or in part, on the Business Day prior to _____ 1, 20__ or any date thereafter in the order of payment date as directed by the City, at a prepayment price equal to the principal amount of the Series 2024 Installment Payments to be prepaid, together with accrued interest thereon to the date of prepayment, without premium.
(b) Notwithstanding any such prepayment, the City shall not be relieved of its obligations hereunder, including its obligations under Article IV, until the Purchase Price shall have been fully paid (or provision for payment thereof shall have been provided to the written satisfaction of the Authority).

Section 7.02. Method of Prepayment. Before making any prepayment pursuant to Section 7.01, the City shall, within five (5) days following the event permitting the exercise of such right to prepay or creating such obligation to prepay, give written notice to the Authority and the Trustee describing such event and specifying the date on which the prepayment will be paid, which date shall be not less than sixty (60) (or such shorter number of days as is acceptable to the Trustee) days from the date that such notice is given.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY
Section 8.01. Events of Default and Acceleration of Maturities. If one or more of the following Events of Default shall happen:
(a) if default shall be made by the City in the due and punctual payment of any Series 2024 Installment Payment or any Parity Bonds when and as the same shall become due and payable; (b) if default shall be made by the City in the performance of any of the agreements or covenants which are required herein to be performed by it, and such default shall have continued for a period of thirty (30) days after the City shall have been given notice in writing of such default by the Authority; provided, however, that if in the reasonable opinion of the City the default stated in the notice can be corrected, but not within such thirty (30) day period, and corrective action is instituted by the City within such thirty (30) day period and diligently pursued in good faith until the default is corrected, such default shall not be an Event of Default hereunder; (c) if the City shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the City seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property; or 3153
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(d) if payment of the principal of any Parity Bond is accelerated in accordance with its terms;
then and in each and every such case during the continuance of an Event of Default, the Authority shall, by notice in writing to the City, declare the entire principal amount of the unpaid Series 2024 Installment Payments and the accrued interest thereon to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything contained herein to the contrary notwithstanding.

This section, however, is subject to the condition that if at any time after the entire principal amount of the unpaid Series 2024 Installment Payments and the accrued interest thereon shall have been so declared due and payable, but before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the City shall deposit with the Authority an amount that is sufficient to pay the unpaid principal amount of the Series 2024 Installment Payments or the unpaid payment of any other Parity Bond referred to in clause (a) above due prior to such declaration and the accrued interest thereon, with interest on such overdue installments, at the rate or rates applicable to the remaining unpaid principal balance of the Series 2024 Installment Payments or such Parity Bond if paid in accordance with their terms, and the reasonable expenses of the Authority, and any and all other defaults known to the Authority (other than in the payment of the entire principal amount of the unpaid Series 2024 Installment Payments and the accrued interest thereon due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Authority or provision deemed by the Authority to be adequate shall have been made therefor, then and in every such case the Authority, by written notice to the City, may rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or affect any subsequent default or impair or exhaust any right or power consequent thereon.

Section 8.02. Application of Funds Upon Acceleration. Upon the date of the declaration of acceleration as provided in Section 8.01, all Net Revenues thereafter received by the City shall be applied in the following order:

First, to the payment, without preference or priority, and in the event of any insufficiency of such Net Revenues ratably without any discrimination or preference, of the fees, costs and expenses of the Trustee and its assigns and thereafter to the Authority, as the case may be, in carrying out the provisions of this article, including reasonable compensation to their respective accountants and counsel;
Second, to the payment of Maintenance and Operation costs; and Third, to the payment, on a pro rata basis, of the entire principal amount of the unpaid Series 2024 Installment Payments and the unpaid principal amount of all Parity Bonds and the accrued interest thereon, with interest on the overdue installments at the rate or rates of interest applicable to the Series 2024 Installment Payments and such Parity Bonds if paid in accordance with their respective terms.

Section 8.03. Other Remedies of the Authority. The Authority shall have the right:
(a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the City or any director, officer or employee thereof, and to compel the City or any such director, officer or employee to perform and carry out its or his or her duties under the laws of 3154
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the State of California and the agreements and covenants required to be performed by it or him or her contained herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Authority; or
(c) by suit in equity upon the happening of an Event of Default to require the City and its directors, officers and employees to account as the trustee of an express trust.

Notwithstanding anything contained herein, the Authority shall have no security interest in or mortgage on the 2024 Project, the Water System or other assets of the City and no default hereunder shall result in the loss of the 2024 Project, the Water System or other assets of the City.

Section 8.04. Non-Waiver. Nothing in this article or in any other provision hereof shall affect or impair the obligation of the City, which is absolute and unconditional, to pay the Series 2024 Installment Payments to the Authority at the respective due dates or upon prepayment from the Net Revenues, the Rate Stabilization Fund and the other funds herein pledged for such payment, or shall affect or impair the right of the Authority, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein.

A waiver of any default or breach of duty or contract by the Authority shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Authority to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy that is conferred upon the Authority by the laws of the State of California or by this article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Authority.

If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to the Authority, the City and the Authority shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken.

Section 8.05. Remedies Not Exclusive. No remedy that is conferred upon or reserved to the Authority herein is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by the laws of the State of California or any other law.

ARTICLE IX

DISCHARGE OF OBLIGATIONS
Section 9.01. Discharge of Obligations. When:
(a) all or any portion of the Series 2024 Installment Payments shall have become due and payable in accordance herewith or a written notice of the City to prepay all or any portion of the Series 2024 Installment Payments shall have been filed with the Trustee; and 3155
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(b) there shall have been deposited with the Trustee at or prior to the Series 2024 Installment Payment Date or dates specified for prepayment, in trust for the benefit of the Authority or its assigns and irrevocably appropriated and set aside to the payment of all or any portion of the Series 2024 Installment Payments, sufficient moneys or a combination of sufficient cash and noncallable Permitted Investments that are described in clause (A) of the definition thereof, the principal of and interest on which Permitted Investments when due will provide (together with any cash) money that is sufficient in the opinion of an Independent Certified Public Accountant to pay all principal, prepayment premium, if any, and interest of such Series 2024 Installment Payments to their respective Series 2024 Installment Payment Dates, as the case may be; and (c) provision shall have been made for paying all fees and expenses of the Trustee, then and in that event, the right, title and interest of the Authority herein and the obligations of the City hereunder shall, with respect to all or such portion of the Series 2024 Installment Payments as have been so provided for, thereupon cease, terminate, become void and be completely discharged and satisfied (except for the right of the Trustee and the obligation of the City to have such moneys and such Permitted Investments applied to the payment of such Series 2024 Installment Payments).

In such event, upon request of the City, the Trustee shall cause an accounting for such period or periods as may be requested by the City to be prepared and filed with the City and shall execute and deliver to the City all such instruments as may be necessary or desirable to evidence such total or partial discharge and satisfaction, as the case may be, and, in the event of a total discharge and satisfaction, the Trustee shall pay over to the City, after payment of all amounts due the Trustee pursuant to the Indenture, as an overpayment of Series 2024 Installment Payments, all such moneys or such Permitted Investments held by it pursuant hereto, other than such moneys and such Permitted Investments as are required for the payment or prepayment of the Series 2024 Installment Payments, which moneys and Permitted Investments shall continue to be held by the Trustee in trust for the payment of the Series 2024 Installment Payments and shall be applied by the Trustee to the payment of the Series 2024 Installment Payments of the City.

ARTICLE X

MISCELLANEOUS
Section 10.01. Liability Limited. Notwithstanding anything contained herein, the City shall not be required to advance any moneys derived from any source of income other than the Net Revenues (except to the extent any such covenants are expressly payable hereunder from the Gross Revenues), the Rate Stabiliation Fund and the other funds provided herein for the payment of amounts due hereunder or for the performance of any agreements or covenants that are required to be performed by it contained herein. The City may, however, advance moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and may be legally used by the City for such purpose.

The obligation of the City to make the Series 2024 Installment Payments is a special obligation of the City payable from the Net Revenues and does not constitute a debt of the City or of the State of California or of any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction.

Section 10.02. Benefits of Installment Purchase Agreement Limited to Parties. Nothing contained herein, expressed or implied, is intended to give to any person other than the City and the 3156
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Authority any right, remedy or claim under or pursuant hereto, and any agreement or covenant that is required herein to be performed by or on behalf of the City or the Authority shall be for the sole and exclusive benefit of the other party.

Section 10.03. Successor Is Deemed Included in all References to Predecessor. Whenever either the City or the Authority is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the City or the Authority, and all agreements and covenants which are required hereby to be performed by or on behalf of the City or the Authority shall bind and inure to the benefit of the respective successors thereof whether so expressed or not.

Section 10.04. Waiver of Personal Liability. No member, officer or employee of the City shall be individually or personally liable for the payment of the Series 2024 Installment Payments, but nothing contained herein shall relieve any member, officer or employee of the City from the performance of any official duty provided by any applicable provisions of law or hereby.

Section 10.05. Article and Section Headings, Gender and References. The headings or titles of the several articles and sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof, and words of any gender shall be deemed and construed to include all genders. All references herein to “Articles,” “Sections” and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof and the words “hereby,” “herein,” “hereof,” “hereto,” “herewith” and other words of similar import refer to the Installment Purchase Agreement as a whole and not to any particular article, section, subdivision or clause hereof.

Section 10.06. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the City or the Authority shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof. The City and the Authority hereby declare that they would have executed the Installment Purchase Agreement, and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid.

Section 10.07. Assignment. The Installment Purchase Agreement and any rights hereunder may be assigned by the Authority, as a whole or in part, without the necessity of obtaining the prior consent of the City. In addition to the rights and remedies assigned by the Authority to the Trustee, to the extent that the Indenture and the Installment Purchase Agreement confer upon or give or grant to the Trustee any right, remedy or claim under or by reason of the Indenture or the Installment Purchase Agreement, the Trustee is hereby explicitly recognized as being a third party beneficiary hereunder and may enforce any such right, remedy or claim conferred given or granted.

Section 10.08. Net Contract. The Installment Purchase Agreement shall be deemed and construed to be a net contract, and the City shall pay absolutely net during the term hereof the Series 2024 Installment Payments and all other payments required hereunder, free of any deductions and without abatement, diminution or set-off whatsoever.
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Section 10.09. California Law. THE INSTALLMENT PURCHASE AGREEMENT

SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

Section 10.10. Notices. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other party in writing from time to time, namely:

If to the City: City of Ontario
303 East B Street
Ontario, California 91764
Attention: City Manager
If to the Authority: Ontario Public Financing Authority c/o City of Ontario
303 East B Street
Ontario, California 91764
Attention: Executive Director
If to the Trustee: Zions Bancorporation, National Association 550 South Hope Street, Suite 2875
Los Angeles, California 90071
Attention: Corporate Trust
Reference: Ontario 2024 Water Revenue Bonds
Section 10.11. Effective Date. The Installment Purchase Agreement shall become effective upon its execution and delivery, and shall terminate when the Purchase Price shall have been fully paid (or provision for the payment thereof shall have been made to the written satisfaction of the Authority).

Section 10.12. Execution in Counterparts. The Installment Purchase Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument.

Section 10.13. Indemnification of Authority. The City hereby agrees to indemnify and hold harmless the Authority and its assigns and its officers and directors if and to the extent permitted by law, from and against all claims, advances, damages and losses, including legal fees and expenses, arising out of or in connection with the acceptance or the performance of its duties hereunder and under the Indenture; provided that no indemnification will be made for willful misconduct, negligence or breach of an obligation hereunder or under the Indenture by the Authority.

Section 10.14. Amendments Permitted.
(a) This Installment Purchase Agreement and the rights and obligations of the Authority and the City and of the Owners of the 2024 Bonds and of the Trustee may be modified or amended at any time by an amendment hereto which shall become binding upon the prior written consents of the Owners of a majority in aggregate principal amount of the 2024 Bonds then Outstanding, exclusive of 2024 Bonds disqualified as provided in Section 11.09 of the Indenture. No 3158
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such modification or amendment may: (1) extend the fixed maturity of any 2024 Bonds, or reduce the amount of principal thereof or premium (if any) thereon, or extend the time of payment, or change the rate of interest or the method of computing the rate of interest thereon, or extend the time of payment of interest thereon, without the consent of the Owner of each 2024 Bond so affected; or (2) reduce the aforesaid percentage of 2024 Bonds the consent of the Owners of which is required to affect any such modification or amendment, or permit the creation of any lien on the Net Revenues and other assets pledged under the Installment Purchase Agreement prior to or on a parity with the lien created by the Installment Purchase Agreement except as permitted herein, or deprive the Owners of the 2024 Bonds of the lien created by the Indenture on such Revenues and other assets except as permitted herein, without the consent of the Owners of all of the 2024 Bonds then Outstanding.
(b) This Installment Purchase Agreement and the rights and obligations of the Authority and the City and of the Owners of the 2024 Bonds may also be modified or amended at any time by an amendment hereto which shall become binding upon adoption, but only to the extent permitted by law and only for any one or more of the following purposes: (1) to add to the covenants and agreements of the City contained in the Installment Purchase Agreement other covenants and agreements thereafter to be observed, to pledge or assign additional security for the 2024 Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the City; (2) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in the Installment Purchase Agreement, or in regard to matters or questions arising under the Installment Purchase Agreement, as the City may deem necessary or desirable; and (3) to modify, amend or supplement the Installment Purchase Agreement in such manner as to cause interest on the 2024 Bonds to remain excludable from gross income under the Code. No amendment without consent of the Owners may modify any of the rights or obligations of the Trustee without the written consent thereto. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed and attested this Installment Purchase Agreement by their officers thereunto duly authorized as of the day and year first written above.

CITY OF ONTARIO
By:

City Manager
ATTEST:

City Clerk

ONTARIO PUBLIC FINANCING AUTHORITY
By:

Executive Director
ATTEST:

Secretary
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EXHIBIT A
DESCRIPTION OF THE 2024 PROJECT
Project Description Estimated Costs
Facility Site Security Improvements $ 5,000,000
Water System Planning (master plans)(urban water management plan) (cyber security planning)
1,000,000
AMI Antenna Tower (Phase II FY 24-25) 1,500,000
Onsite Chlorine Generators 6,000,000
Water Mains - Transit/Emporia/Palm/Laurel 1,000,000
Potable Well No. 53 Drilling 3,000,000
Wells Maintenance and Repairs 1,000,000
Ontario Ranch Phase 2B Water Mains 4,000,000
Water Main Improvements - Downtown 2,500,000
Citywide Water Main Improvements 20,000,000
Water Mains Edison/Bonview 2,500,000
CDA Booster Station Upgrade 2,500,000
TOTAL $ 50,000,000
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EXHIBIT B

PURCHASE PRICE

1. The principal amount of payments to be made by the City hereunder is $___________.

2. The Series 2024 Installment Payments of principal and interest are payable in the amounts and on the Series 2024 Installment Payment Dates as follows:

Series 2024
Installment Payment
Date
Amount
Attributable to
Principal
Amount
Attributable to
Interest Total
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Series 2024
Installment Payment
Date
Amount
Attributable to
Principal
Amount
Attributable to
Interest Total
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EXHIBIT C

FORM OF REQUISITION FROM ACQUISITION FUND
$__________

ONTARIO PUBLIC FINANCING AUTHORITY
WATER REVENUE BONDS, SERIES 2024A
REQUISITION NO. __ FOR

DISBURSEMENT FROM ACQUISITION FUND
The undersigned hereby states and certifies:
(i) that the undersigned is the duly appointed, qualified and acting City Manager of the City of Ontario, a municipal corporation that is organized and existing under the general laws of the State of California (the “City”), and as such, is familiar with the facts herein certified and is authorized to certify the same;
(ii) that, pursuant to Section 3.05 of that certain Installment Purchase Agreement, dated as of _____ 1, 2024, by and between the City and the Ontario Public Financing Authority, the undersigned hereby requests the Director of Finance of the City to disburse this date the following amounts from the Acquisition Fund established under the Indenture relating to the above-captioned obligations to the payees designated on the attached Exhibit A; (iii) that each obligation mentioned herein has been incurred by the City and is a proper charge against the Acquisition Fund;
(iv) that any approval required under the California Environmental Quality Act, as amended (Division 13 of the California Public Resources Code), prior to the expenditure of such amount for the purpose set forth on the attached Exhibit A has been received and is final; and (v) that there has not been filed with or served upon the City notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable to any of the payees named on the attached Exhibit A, which has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen’s or mechanics’ liens accruing by mere operation of law.

Dated: , 20__

CITY OF ONTARIO
By:

City Manager
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EXHIBIT A

ACQUISITION FUND DISBURSEMENTS
Item
Number Payee Name and Address Purpose of Obligation Amount 3165
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EXHIBIT D

FORM OF SUBSTITUTION STATEMENT
Zions Bancorporation, National Association
550 South Hope Street, Suite 2875
Los Angeles, California 90071
Attention: Corporate Trust
Reference: Ontario 2024 Water Revenue Bonds
The undersigned ______ of the City of Ontario (the “City”) hereby states pursuant to Section 3.02 of the Installment Purchase Agreement, dated as of _____ 1, 2024 (the “IPA”), by and between the City and the Ontario Public Financing Authority, that each component of the 2024 Project (as such term is defined in the IPA) described in the first column of Exhibit A attached hereto, with an estimated cost set forth in the second column of Exhibit A, will be replaced by the corresponding improvement described in the third column of Exhibit A with an estimated cost set forth in the fourth column of Exhibit A.

Dated: _________ __, 20__
______
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EXHIBIT A
Components of
2024 Project to
be Replaced
Cost of Each
Component of
2024 Project
to be Replaced
Improvements
to be
Substituted
Cost of Each
Improvement
to be
Substituted
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This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

PRELIMINARY OFFICIAL STATEMENT DATED _____, 2024
Rating: S&P: _____
NEW ISSUE – BOOK-ENTRY ONLY See the caption “RATING”
In the opinion of Stradling Yocca Carlson & Rauth LLP, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described in this Official Statement, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income tax. See “TAX MATTERS” with respect to certain tax consequences relating to the Bonds, including with respect to the alternative minimum tax imposed on certain large corporations.” $__________∗

ONTARIO PUBLIC FINANCING AUTHORITY
WATER REVENUE BONDS, SERIES 2024A
Dated: Date of Delivery Due: August 1, as shown on inside front cover page The Bonds are being issued in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York. Individual purchases will be made in denominations of $5,000 and integral multiples thereof and will be in book-entry form only. Purchasers of the Bonds will not receive certificates representing their beneficial ownership in the Bonds but will receive credit balances on the books of their respective nominees. Interest on the Bonds is payable on February 1 and August 1 of each year, commencing _____ 1, 20__. Payment of the principal of and interest on the Bonds is to be made to Cede & Co., which is to disburse said payments to the Beneficial Owners of the Bonds through their nominees.

The Bonds are subject to optional and mandatory sinking fund redemption prior to maturity, all as more fully described herein.

The Bonds are being issued to provide funds: (i) to finance certain capital improvements to the City’s municipal water system; and (ii) to pay costs incurred in connection with the issuance of the Bonds.

The Bonds are being issued pursuant to the Indenture of Trust, dated as of _____ 1, 2024, by and between the Ontario Public Financing Authority and Zions Bancorporation, National Association, as trustee. THE BONDS ARE A SPECIAL LIMITED OBLIGATION OF THE AUTHORITY PAYABLE SOLELY FROM AUTHORITY REVENUES, WHICH CONSIST OF SERIES 2024

INSTALLMENT PAYMENTS TO BE MADE BY THE CITY TO THE AUTHORITY PURSUANT TO THE INSTALLMENT PURCHASE AGREEMENT, DATED AS OF _____ 1, 2024, BY AND BETWEEN THE CITY AND THE AUTHORITY, AND FROM CERTAIN OTHER FUNDS AND ACCOUNTS HELD BY THE TRUSTEE PURSUANT TO THE INDENTURE. NEITHER THE FULL

FAITH AND CREDIT NOR ANY OTHER REVENUES OR FUNDS OF THE AUTHORITY ARE PLEDGED TO OR AVAILABLE FOR THE PAYMENT OF DEBT SERVICE ON THE BONDS. THE OBLIGATION OF THE AUTHORITY TO MAKE PAYMENTS

OF PRINCIPAL AND INTEREST ON THE BONDS DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE AUTHORITY

IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE AUTHORITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE AUTHORITY HAS NO TAXING POWER.

No debt service reserve fund or account has been established under the Indenture or the Installment Purchase Agreement in connection with the issuance of the Bonds.

The obligation of the City to pay Series 2024 Installment Payments is payable from Net Revenues on a parity with the City’s obligation to pay debt service on the City of Ontario Water Revenue Refunding Bonds, Series 2021 (Federally Taxable), which are currently outstanding in the aggregate principal amount of $62,625,000. The City may incur additional obligations payable from Net Revenues on a parity with the obligation to pay Series 2024 Installment Payments, subject to the terms and conditions of the Installment Purchase Agreement, as more fully described herein.

THE OBLIGATION OF THE CITY TO MAKE SERIES 2024 INSTALLMENT PAYMENTS PURSUANT TO THE

INSTALLMENT PURCHASE AGREEMENT DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY IS

OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE OBLIGATION OF THE CITY TO MAKE THE SERIES 2024 INSTALLMENT

PAYMENTS IS A SPECIAL LIMITED OBLIGATION OF THE CITY PAYABLE SOLELY FROM NET REVENUES OF THE CITY’S WATER SYSTEM AND DOES NOT CONSTITUTE A DEBT OF THE CITY OR OF THE STATE OF CALIFORNIA

OR OF ANY POLITICAL SUBDIVISION THEREOF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.
____________________________________
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.

MATURITY SCHEDULE
(See inside front cover page)
The Bonds are offered when, as and if issued and received by the Underwriter, subject to the approval of the valid, legal and binding nature of the Bonds by Stradling Yocca Carlson & Rauth LLP, Bond Counsel, and certain other conditions. Certain matters will be passed upon for the City and the Authority by the City Attorney, and by Stradling Yocca Carlson & Rauth LLP, as Disclosure Counsel, for the Underwriter by its counsel, Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. It is anticipated that the Bonds will be available for delivery through the facilities of The Depository Trust Company on or about _____, 2024.

RAMIREZ & CO., INC. Dated: _____, 2024
∗ Preliminary, subject to change.
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$___________∗

ONTARIO PUBLIC FINANCING AUTHORITY
WATER REVENUE BONDS, SERIES 2024A

MATURITY SCHEDULE
BASE CUSIP† _____
Maturity
(August 1)
Principal
Amount Interest Rate Yield Price CUSIP†
$__________ _____% Term Bond due August 1, 20__, Yield: _____%, Price: _____, CUSIP† _____ $__________ _____% Term Bond due August 1, 20__, Yield: _____%, Price: _____, CUSIP† _____ ∗ Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems. Copyright© CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database.

CUSIP® numbers are provided for convenience of reference only. None of the Authority, the City, the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers. 3169
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CITY OF ONTARIO

COUNTY OF SAN BERNARDINO

STATE OF CALIFORNIA

CITY COUNCIL AND AUTHORITY BOARD OF DIRECTORS
Paul S. Leon, Mayor and Authority Chair
Debra Dorst-Porada, Mayor Pro Tem and Authority Vice Chair Alan D. Wapner, Councilmember and Authority Board Member Jim W. Bowman, Councilmember and Authority Board Member Ruben Valencia, Councilmember and Authority Board Member STAFF
Scott Ochoa, City Manager and Authority Executive Director James R. Milhiser, City Treasurer
Sheila Mautz, City Clerk and Authority Secretary
Armen Harkalyan, Executive Director of Finance and Authority Treasurer Doreen Nunes, Assistant Finance Director
Scott Burton, Utilities General Manager
Michael Sigsbee, Utilities Administration and Customer Service Assistant General Manager Albert Gastelum, Utilities Engineering and Utilities Operations Assistant General Manager

SPECIAL SERVICES
City Attorney and Authority General Counsel
Best Best & Krieger LLP
Ontario, California
Bond and Disclosure Counsel
Stradling Yocca Carlson & Rauth LLP
Newport Beach, California
Municipal Advisor
Urban Futures, Inc
Walnut Creek, California
Trustee
Zions Bancorporation, National Association
Los Angeles, California
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No dealer, broker, salesperson or other person has been authorized by the City or the Authority to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the City or the Authority. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers or Owners of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact.

The Underwriter has provided the following sentence for inclusion in this Official Statement:

The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

This Official Statement and the information that is contained herein are subject to completion or amendment without notice, and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or the Authority or any other parties that are described herein since the date hereof.

These securities may not be sold, nor may an offer to buy them be accepted, prior to the time that the Official Statement is delivered in final form. This Official Statement is being submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the City. All summaries of documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions.

Certain statements which are included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used, such as “plan,” “expect,” “estimate,” “project,” “budget,” “intend” or similar words. Such forward-looking statements include, but are not limited to, certain statements contained under the captions “THE CITY,” “THE WATER SYSTEM” AND “WATER SYSTEM FINANCIAL INFORMATION.”

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH

FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER

FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE

MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. IN

EVALUATING SUCH STATEMENTS, POTENTIAL INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS

FACTORS WHICH COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.

IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR

EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS

TO CERTAIN DEALERS, DEALER BANKS, BANKS ACTING AS AGENT AND OTHERS AT PRICES LOWER THAN

THE PUBLIC OFFERING PRICE STATED ON THE COVER PAGE HEREOF, AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN

RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT, AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

The City maintains a website; however, information presented on such website is not a part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds. 3171

TABLE OF CONTENTS
Page
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INTRODUCTION ................................................................................................................................................ 4 THE 2024 PROJECT............................................................................................................................................ 5 ESTIMATED SOURCES AND USES OF FUNDS ............................................................................................ 5 THE BONDS........................................................................................................................................................ 5 General Provisions......................................................................................................................................... 5 Book-Entry Only System............................................................................................................................... 6 Transfers and Exchanges Upon Termination of Book-Entry Only System ................................................... 6 Redemption.................................................................................................................................................... 7 Selection of Bonds for Redemption ............................................................................................................... 7 Notice of Redemption.................................................................................................................................... 8 Effect of Redemption..................................................................................................................................... 8 DEBT SERVICE SCHEDULE............................................................................................................................. 9 SECURITY FOR THE BONDS........................................................................................................................... 9 General........................................................................................................................................................... 9 Series 2024 Installment Payments Payable From Net Revenues................................................................. 10 Rate Covenant.............................................................................................................................................. 11 No Reserve Fund.......................................................................................................................................... 12 Rate Stabilization Fund................................................................................................................................ 12 Additional Parity Bonds............................................................................................................................... 12 THE CITY .......................................................................................................................................................... 13 General......................................................................................................................................................... 13 Land Use and Service Area.......................................................................................................................... 14 Seismic Considerations................................................................................................................................ 14 Governance and Management...................................................................................................................... 15 Employees.................................................................................................................................................... 18 Budget Process............................................................................................................................................. 18 City Insurance .............................................................................................................................................. 19 Outstanding Parity Obligations.................................................................................................................... 20 Financial Statements.................................................................................................................................... 20 THE WATER SYSTEM..................................................................................................................................... 21 General......................................................................................................................................................... 21 Water Quality............................................................................................................................................... 21 Water Supply ............................................................................................................................................... 23 Drought Declarations................................................................................................................................... 29 Historical Water System Supply .................................................................................................................. 31 Historical Water System Deliveries............................................................................................................. 32 Historical Water System Connections ......................................................................................................... 32 Historical Water System Sales Revenues .................................................................................................... 33 Largest Water System Customers................................................................................................................ 34 Water System Rates and Charges ................................................................................................................ 34 Water System Collection Procedures........................................................................................................... 36 Future Water System Improvements............................................................................................................ 37 Projected Water System Supply................................................................................................................... 37 Projected Water System Deliveries.............................................................................................................. 38 Projected Water System Connections.......................................................................................................... 38 Projected Water System Sales Revenues..................................................................................................... 39 3172

TABLE OF CONTENTS
(continued)
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WATER SYSTEM FINANCIAL INFORMATION .......................................................................................... 39 Available Cash............................................................................................................................................. 39 Historical Operating Results and Debt Service Coverage............................................................................ 39 Projected Operating Results and Debt Service Coverage ............................................................................ 41 Employee Benefits....................................................................................................................................... 42 CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES......................................... 47 Article XIIIB................................................................................................................................................ 47 Proposition 218 ............................................................................................................................................ 48 Proposition 26 .............................................................................................................................................. 50 Future Initiatives.......................................................................................................................................... 50 CERTAIN RISKS TO BONDHOLDERS.......................................................................................................... 50 Limited Obligations..................................................................................................................................... 51 Accuracy of Assumptions............................................................................................................................ 51 Water System Demand................................................................................................................................. 51 Water System Expenses............................................................................................................................... 51 Limited Recourse on Default ....................................................................................................................... 51 Rate-Setting Process under Proposition 218................................................................................................ 52 Statutory and Regulatory Compliance ......................................................................................................... 52 Natural Disasters.......................................................................................................................................... 52 Limitations on Remedies ............................................................................................................................. 53 Loss of Tax Exemption................................................................................................................................ 53 Secondary Market ........................................................................................................................................ 53 Parity Obligations ........................................................................................................................................ 54 Climate Change............................................................................................................................................ 54 Cyber Security ............................................................................................................................................. 54 Rate Covenant Not a Guarantee................................................................................................................... 54 THE AUTHORITY ............................................................................................................................................ 55 APPROVAL OF LEGAL PROCEEDINGS....................................................................................................... 55 LITIGATION ..................................................................................................................................................... 55 General......................................................................................................................................................... 55 Chino Basin Watermaster Litigation – CEQA Budget ................................................................................ 56 Chino Basin Watermaster Litigation – Dry Year Yield Program ................................................................ 56 Chino Basin Program Litigation .................................................................................................................. 57 Water Rate Litigation................................................................................................................................... 57 Regional Sewer Service Contract Litigation................................................................................................ 57 The Authority............................................................................................................................................... 58 TAX MATTERS................................................................................................................................................. 58 CONTINUING DISCLOSURE.......................................................................................................................... 59 RATING ............................................................................................................................................................. 60 MUNICIPAL ADVISOR ................................................................................................................................... 60 UNDERWRITING ............................................................................................................................................. 61 3173

TABLE OF CONTENTS
(continued)
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FINANCIAL INTERESTS................................................................................................................................. 61 MISCELLANEOUS........................................................................................................................................... 61 APPENDIX A - CITY FINANCIAL STATEMENTS ....................................................................................A-1

APPENDIX B - DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE INSTALLMENT PURCHASE AGREEMENT AND THE INDENTURE..........................B-1 APPENDIX C - FORM OF OPINION OF BOND COUNSEL.......................................................................C-1 APPENDIX D - INFORMATION CONCERNING DTC...............................................................................D-1 APPENDIX E - FORM OF CONTINUING DISCLOSURE CERTIFICATE................................................ E-1 3174
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SUMMARY STATEMENT
This Summary Statement is subject in all respects to the more complete information contained in this Official Statement, and the offering of the Bonds to potential investors is made only by means of the entire Official Statement. Capitalized terms that are used and not otherwise defined in this Summary Statement have the meanings ascribed to them in this Official Statement.

Purpose. The Bonds are being issued to provide funds: (i) to finance certain capital improvements to the City’s Water System, as described under the caption “THE 2024 PROJECT;” and (ii) to pay costs incurred in connection with the issuance of the Bonds. See the caption “ESTIMATED SOURCES AND USES OF FUNDS.”
Security for the Bonds. The Bonds are a special limited obligation of the Authority payable solely from Authority Revenues, which consist of Series 2024 Installment Payments to be made by the City to the Authority pursuant to the Installment Purchase Agreement and amounts on deposit in certain funds and accounts established by the Indenture. Neither the full faith and credit nor any other revenues or funds of the Authority are pledged to or available for the payment of debt service on the Bonds. THE OBLIGATION OF

THE AUTHORITY TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON THE BONDS DOES

NOT CONSTITUTE AN OBLIGATION FOR WHICH THE AUTHORITY IS OBLIGATED TO LEVY OR

PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE AUTHORITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE AUTHORITY HAS NO TAXING POWER.

The obligation of the City to make Series 2024 Installment Payments is a special limited obligation of the City payable solely from Net Revenues of the City’s Water System, which consist of Gross Revenues of the City’s Water System remaining after payment of Maintenance and Operation Costs of the City’s Water System. See the caption “SECURITY FOR THE BONDS.”
The obligation of the City to make the Series 2024 Installment Payments under the Installment Purchase Agreement is absolute and unconditional, and until such time as all payments that are required thereunder have been paid in full (or provision for the payment thereof has been made as provided for in the Installment Purchase Agreement), the City will not discontinue or suspend any Series 2024 Installment Payments required to be made by it under the Installment Purchase Agreement when due, whether or not the Water System or any part thereof is operating or operable, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and whether or not the 2024 Project has been completed, and such payments will not be subject to reduction whether by offset or otherwise and will not be conditional upon the performance or nonperformance by any party of any agreement for any cause whatsoever.

THE OBLIGATION OF THE CITY TO MAKE SERIES 2024 INSTALLMENT PAYMENTS

PURSUANT TO THE INSTALLMENT PURCHASE AGREEMENT DOES NOT CONSTITUTE AN

OBLIGATION FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.

THE OBLIGATION OF THE CITY TO MAKE THE SERIES 2024 INSTALLMENT PAYMENTS IS A

SPECIAL LIMITED OBLIGATION OF THE CITY PAYABLE SOLELY FROM NET REVENUES AND

DOES NOT CONSTITUTE A DEBT OF THE CITY OR OF THE STATE OF CALIFORNIA OR OF ANY

POLITICAL SUBDIVISION THEREOF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.

No Reserve Fund. No debt service reserve fund or account has been established under the Indenture or the Installment Purchase Agreement in connection with the issuance of the Bonds.

Rate Stabilization Fund. The City has agreed and covenanted to maintain, so long as any Bonds remain outstanding, a Rate Stabilization Fund. There is $__________ on deposit in the Rate Stabilization 3175
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Fund as of the date of the initial issuance of the Bonds. The City may deposit amounts therein from time to time in its sole discretion.

The Rate Stabilization Fund and all amounts on deposit therein have been irrevocably pledged to the payment of the Series 2024 Installment Payments and Parity Bonds as provided herein. The City may withdraw all or any portion of the amounts on deposit in the Rate Stabilization Fund from time to time and transfer such amounts to the Revenue Fund for application in accordance with the Installment Purchase Agreement. Amounts transferred from the Rate Stabilization Fund to the Revenue Fund during or within 270 days after the end of a Fiscal Year may be taken into account as Gross Revenues for purposes of the calculations under the additional debt test and the rate covenant under the Installment Purchase Agreement in such Fiscal Year to the extent provided in the definition of “Gross Revenues” in the Installment Purchase Agreement. See the caption “SECURITY FOR THE BONDS—Rate Stabilization Fund.” Rate Covenant. The City will, to the fullest extent permitted by law, fix, prescribe, revise and collect Charges for the Water System during each Fiscal Year which are reasonably expected, at the commencement of each Fiscal Year, to be at least sufficient, after making allowances for contingencies and error in the estimates, to pay the following amounts in the following order: (1) all Maintenance and Operation Costs of the Water System estimated by the City to become due and payable in such Fiscal Year; (2) the Debt Service on the Series 2024 Installment Payments and any Parity Bonds; (3) all other payments required for compliance with the Installment Purchase Agreement and the Parity Bonds Instruments pursuant to which any Parity Bonds relating to the Water System shall have been issued; and (4) all payments required to meet any other obligations of the City which are charges, liens, encumbrances upon or payable from the Gross Revenues of the Water System or the Net Revenues of the Water System.

In addition, the City will fix, prescribe, revise and collect Charges for the Water System during each Fiscal Year which are sufficient to yield Net Revenues of the Water System at least equal to 100% of the amounts payable under the preceding clause (2) in such Fiscal Year for the Series 2024 Installment Payments and Parity Bonds which have a lien on such Net Revenues.

See the caption “SECURITY FOR THE BONDS—Rate Covenant.” Outstanding Parity Obligations. The obligation of the City to pay Series 2024 Installment Payments is payable from Net Revenues on a parity with the City’s obligation to pay debt service on the City of Ontario Water Revenue Refunding Bonds, Series 2021 (Federally Taxable), which are currently outstanding in the aggregate principal amount of $62,625,000.

Additional Indebtedness. The Installment Purchase Agreement permits the City to issue Parity Bonds payable from Net Revenues on a parity with the Series 2024 Installment Payments provided that certain conditions are satisfied as described herein. Nothing in the Installment Purchase Agreement precludes the City from entering into obligations which are Maintenance and Operation Costs and, therefore, payable from Gross Revenues prior to the Series 2024 Installment Payments, or from issuing any bonds or executing any contracts the payments under which are payable from Net Revenues on a subordinate basis to the Series 2024 Installment Payments and any Parity Bonds. See the caption “SECURITY FOR THE BONDS—Additional Parity Bonds.”
Redemption. The Bonds are subject to optional and mandatory sinking fund redemption prior to maturity. See the caption “THE BONDS—Redemption.”
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The City and the Water System. The City is located in southwestern San Bernardino County (the “County”), approximately 35 miles east of Los Angeles near the intersection of Interstates 10 and 15 in the area of southern California known as the “Inland Empire.” The City is adjacent to the cities of Upland, Montclair, Chino and Rancho Cucamonga. The City had a population of approximately 181,224 as of January 1, 2024 and covers approximately 50 square miles. The City was incorporated in 1891 and is a general law city operating under a council/manager form of government. Land use in the City is primarily residential, with areas of commercial and industrial development. See the caption “—Land Use and Service Area.”
The City provides a full range of services, including police and fire protection, construction and maintenance of streets, parks, water and sewer lines, traffic signals and other infrastructure, water, sewer and integrated waste services, recreation and community services and arts, cultural and social programs. The City also operates a municipal golf course, a convention center and a sports and entertainment arena (the Toyota Arena, which opened in 2008).

The City supplies potable water to approximately 34,145 single family and multi-family residential connections and potable and recycled water to approximately 4,288 commercial, industrial, irrigation and other connections.

The City’s water sources include: (i) groundwater pumped from City-owned wells in the Chino Groundwater Basin (the “Chino Basin”); (ii) imported State Water Project (“SWP”) water which the City purchases from the Water Facilities Authority (“WFA”); (iii) desalted groundwater which the City purchases from the Chino Basin Desalter Authority (“CDA”); (iv) groundwater and/or surface water which the City purchases from the San Antonio Water Company (“SAWCO”); and (v) recycled water which the City purchases from the Inland Empire Utilities Agency (“IEUA”). See the caption “THE WATER SYSTEM— Water Supply” for a detailed description of the City’s various water sources.

The Water System includes 17 active groundwater wells and 5 inactive groundwater wells in the Chino Basin, 12 reservoirs with a total combined storage capacity of approximately 75 million gallons, 6 booster stations, 18 pressure regulating stations and approximately 618 miles of potable water pipelines varying in size from 2 inches to 42 inches, as well as approximately 56 miles of recycled water pipelines. The City maintains nine interconnections with neighboring water systems to ensure a stable water supply during emergencies or other disruptions to the Water System.

In addition to wellhead treatment facilities which the City operates at City-owned groundwater wells, the City owns treatment capacity in the WFA’s Agua de Lejos Water Treatment Plant, which treats imported SWP water, and in CDA facilities, which treat local brackish groundwater, in each case along with other regional partners.
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$__________∗

ONTARIO PUBLIC FINANCING AUTHORITY
WATER REVENUE BONDS, SERIES 2024A

INTRODUCTION
This Official Statement, including the front cover page, the inside front cover page and the appendices, provides certain information concerning the sale and delivery of the Ontario Public Financing Authority Water Revenue Bonds, Series 2024A (the “Bonds”). Descriptions and summaries of various documents that are set forth in this Official Statement do not purport to be comprehensive or definitive, and reference is made to each document for complete details of all terms and conditions. All statements herein are qualified in their entirety by reference to each such document. Capitalized terms that are used and not otherwise defined in this Official Statement have the meanings ascribed thereto in Appendix B.

The Bonds are being issued to provide funds: (i) to finance certain capital improvements to the City’s Water System, as described under the caption “THE 2024 Project;” and (ii) to pay costs incurred in connection with the issuance of the Bonds. See the caption “ESTIMATED SOURCES AND USES OF FUNDS.” The Bonds are being issued pursuant to an Indenture of Trust, dated as of _____ 1, 2024 (the “Indenture”), by and between the Ontario Public Financing Authority (the “Authority”) and Zions Bancorporation, National Association, as trustee (the “Trustee”). The Bonds are limited obligations of the Authority payable solely from Authority Revenues, which consist of payments (the “Series 2024 Installment Payments”) to be made by the City of Ontario (the “City”) to the Authority pursuant to an Installment Purchase Agreement, dated as of _____ 1, 2024 (the “Installment Purchase Agreement”), by and between the City and the Authority, and amounts on deposit in certain funds and accounts established by the Indenture.

The Bonds are subject to optional and mandatory sinking fund redemption prior to maturity. See the caption “THE BONDS—Redemption.”
The obligation of the City to pay Series 2024 Installment Payments is payable from Net Revenues on a parity with the City’s obligation to pay debt service on the City of Ontario Water Revenue Refunding Bonds, Series 2021 (Federally Taxable) (the “2021 Bonds”), which are currently outstanding in the aggregate principal amount of $62,625,000. The Installment Purchase Agreement permits the City to issue Parity Bonds payable from Net Revenues on a parity with the Series 2024 Installment Payments provided that certain conditions are satisfied as described herein. Nothing in the Installment Purchase Agreement precludes the City from entering into obligations which are Maintenance and Operation Costs and, therefore, payable from Gross Revenues prior to the Series 2024 Installment Payments, or from issuing any bonds or executing any contracts the payments under which are payable from Net Revenues on a subordinate basis to the Series 2024 Installment Payments and any Parity Bonds. See the caption “SECURITY FOR THE BONDS—Additional Parity Bonds.”
No debt service reserve fund or account has been established under the Indenture or the Installment Purchase Agreement in connection with the issuance of the Bonds. ∗ Preliminary, subject to change.
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The City has undertaken to provide annual reports to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System (“EMMA”) pursuant to a Continuing Disclosure Certificate. See the caption “CONTINUING DISCLOSURE” and Appendix E.

THE 2024 PROJECT
The “2024 Project” consists of various improvements to the City’s Water System, including but not limited to all or a portion of the costs of facility site security improvements, Water System planning, advanced metering infrastructure antenna towers, onsite chlorine generates, various water main improvements, drilling at potable well No. 53, maintenance and repairs of various wells and an upgrade of the Chino Basin Desalter Authority booster station.

The City intends to apply proceeds of the Bonds to pay for the costs of the 2024 Project. The City expects to comply with all governmental approval, environmental review, public bidding and other permitting requirements for each component of the 2024 Project as required by law. Pursuant to the Installment Purchase Agreement, the City may substitute or add additional projects to the 2024 Project. See Appendix B under the caption “INSTALLMENT PURCHASE AGREEMENT—ACQUISITION OF 2024 PROJECT—Changes to the 2024 Project.”

ESTIMATED SOURCES AND USES OF FUNDS
The following table sets forth the estimated sources and uses of funds in connection with the issuance of the Bonds:

Sources(1)
Principal Amount of Bonds
Plus/Less Net Original Issue Premium/Discount
Total Sources
Uses(1)
Acquisition Fund
Costs of Issuance(2)
Total Uses
(1) Amounts rounded to the nearest dollar. Totals may not add due to rounding. (2) Includes certain legal, municipal advisory, financing, rating agency and Trustee fees, Underwriter’s discount, and printing costs.

THE BONDS
General Provisions
The Bonds will bear interest from and be dated the date of initial issuance, and will be payable upon maturity on the dates set forth on the inside front cover page hereof. Interest on the Bonds will be payable on February 1 and August 1 of each year, commencing _____ 1, 20__. Interest will be calculated at the rates set forth on the inside front cover page hereof on the basis of a year of 360 days comprised of twelve 30 day months.

The Bonds will be delivered only in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only in denominations of $5,000 or any integral multiple thereof. See the caption “— Book-Entry Only System” and Appendix D.
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In the event that the book-entry only system that is described below is discontinued, the principal of and interest on any Bond will be payable by check or draft of the Trustee upon presentation and surrender thereof at maturity or upon prior redemption at the Office of the Trustee in Los Angeles, California. Such principal and interest will be payable in lawful money of the United States of America.

Book-Entry Only System
One fully-registered Bond will be issued for each maturity of the Bonds in the principal amount of the Bonds of such maturity. Each such Bond will be registered in the name of Cede & Co. and will be deposited with DTC. As long as the ownership of the Bonds is registered in the name of Cede & Co., the term “Owner” as used in this Official Statement will refer to Cede & Co. and not to the actual purchasers of the Bonds (the “Beneficial Owners”).

The Authority may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, the Bonds will be printed and delivered and will be governed by the provisions of the Indenture with respect to payment of principal and interest and rights of exchange and transfer.

The Authority cannot and does not give any assurances that DTC participants or others will distribute payments with respect to the Bonds received by DTC or its nominee as the registered Owner, or any redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis. See Appendix D for additional information concerning DTC.

Transfers and Exchanges Upon Termination of Book-Entry Only System In the event that the book-entry system that is described above is discontinued, the Bonds will be printed and delivered as provided in the Indenture. Thereafter, any Bond may, in accordance with its terms, be transferred on the Registration Books by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond at the Office of the Trustee for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee.

The Trustee is not required to register the transfer of any Bond during the period in which the Trustee is selecting Bonds for redemption and any Bond that has been selected for redemption.

Whenever any Bond is surrendered for transfer, the Authority will execute and the Trustee will authenticate and deliver a new Bond or Bonds of authorized denomination or denominations for a like series and aggregate principal amount of the same maturity and series. The Trustee will require the Bond Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. Following any transfer of Bonds, the Trustee will cancel and destroy the Bonds that it has received.

Prior to any transfer of the Bonds outside the book-entry system (including, but not limited to, the initial transfer outside the book-entry system) the transferor will provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Section 6045 of the Code, as amended.

The Trustee shall conclusively rely on the information provided to it and has no responsibility to verify or ensure the accuracy of such information.

Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of other authorized denominations of the same series and maturity. The Trustee is not required to exchange any Bond during the period in which the Trustee is selecting Bonds for redemption or any Bond that has been selected for redemption. The Trustee will require the Bond Owner requesting such exchange to pay any tax or other governmental charge required to be paid with respect to such exchange. Following any exchange of Bonds, the Trustee will cancel and destroy the Bonds that it has received. 3180
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Redemption
Optional Redemption. The Bonds with stated maturities on or after August 1, 20__, are subject to redemption prior to their respective stated maturities, as a whole or in part as directed by the Authority in a Request provided to the Trustee at least 35 days (or such lesser number of days acceptable to the Trustee in the sole discretion of the Trustee, such notice for the convenience of the Trustee) and by lot within each maturity in integral multiples of $5,000, on August 1, 20__ or any date thereafter at a Redemption Price equal to the principal amount thereof plus accrued interest thereon to the date fixed for redemption, without premium.

Mandatory Sinking Fund Redemption. The Bonds with stated maturities on August 1, 20__ are subject to mandatory sinking fund redemption in part (by lot) on August 1, 20__ and each August 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule:

Redemption Date
(August 1)
Principal
Amount

* Maturity.

Redemption Date
(August 1)
Principal
Amount

* Maturity.

If some but not all of the Bonds maturing on August 1, 20__ or August 1, 20__ are redeemed as described under the subcaption “—Optional Redemption,” the principal amount of the applicable Bonds to be redeemed pursuant to the Indenture on any subsequent August 1 will be reduced, by $5,000 or an integral multiple thereof, as designated by the Authority in a Certificate of the Authority filed with the Trustee; provided, however, that the aggregate amount of such reductions may not exceed the aggregate amount of the applicable Bonds redeemed.

Partial Redemption of Bonds. Upon surrender of any Bond redeemed in part only, the Authority will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered and of the same series, interest rate and maturity.

Selection of Bonds for Redemption
Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, the Trustee will select the Bonds for redemption as a whole or in part on any date as directed by the Authority and by lot within each maturity in integral multiples of $5,000 in accordance with the Indenture. The Trustee will 3181
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promptly notify the Authority in writing of the numbers of the Bonds or portions thereof so selected for redemption.

Notice of Redemption
Notice of redemption will be mailed by first class mail not less than 20 days nor more than 60 days before any Redemption Date, to the respective Owners of any Bonds that are designated for redemption at their addresses appearing on the Registration Books, to the Securities Depositories and the Information Services.

Each notice of redemption will state the date of notice, the redemption date, the place or places of redemption and the Redemption Price, and will designate the maturities, CUSIP numbers, if any, and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice will also state that on the redemption date there will become due and payable on each of said Bonds or parts thereof that are designated for redemption the Redemption Price thereof or of said specified portion of the principal thereof in the case of a Bond to be redeemed in part only, together with, interest accrued thereon to the redemption date, and that (provided that moneys for redemption have been deposited with the Trustee) from and after such redemption date interest thereon will cease to accrue, and will require that such Bonds be then surrendered to the Trustee. Neither the failure to receive such notice nor any defect in the notice or the mailing thereof will affect the validity of the redemption of any Bond. Notice of redemption of Bonds will be given by the Trustee, at the expense of the Authority, for and on behalf of the Authority.

With respect to any notice of optional redemption of Bonds, such notice may state that such redemption will be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, and interest on such Bonds to be redeemed and that, if such moneys have not been so received, said notice will be of no force and effect and the Trustee will not be required to redeem such Bonds. In the event that such notice of redemption contains such a condition and such moneys are not so received, the redemption will not be made, and the Trustee will within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received.

Effect of Redemption
Notice of redemption having been duly given as described above under the caption “—Notice of Redemption,” and moneys for payment of the redemption price of, together with interest accrued to the date fixed for redemption on, the Bonds (or portions thereof) so called for redemption being held by the Trustee, on the redemption date designated in such notice, the Bonds (or portions thereof) so called for redemption will become due and payable, interest on the Bonds so called for redemption will cease to accrue, said Bonds (or portions thereof) will cease to be entitled to any benefit or security under the Indenture, and the Owners of said Bonds will have no rights in respect thereof except to receive payment of the redemption price thereof. The Trustee will, upon surrender for payment of any of the Bonds to be redeemed on their Redemption Dates, pay such Bonds at the Redemption Price. All Bonds redeemed pursuant to the provisions of the Indenture will be canceled upon surrender thereof.
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DEBT SERVICE SCHEDULE
Set forth below is a schedule of debt service on the Bonds, which equals the Series 2024 Installment Payments for each annual period ending on June 30 in the years indicated. The below table assumes that there are no optional redemptions of the Bonds.

Period
Ending
June 30 Principal Interest Total
TOTAL

Source: Underwriter.

SECURITY FOR THE BONDS
General
Each Bond is a special limited obligation of the Authority payable solely from Authority Revenues, which consist of Series 2024 Installment Payments to be made by the City under the Installment Purchase Agreement and certain other funds and accounts established pursuant to the Indenture. NEITHER THE FULL

FAITH AND CREDIT NOR ANY OTHER REVENUES OR FUNDS OF THE AUTHORITY ARE PLEDGED TO OR AVAILABLE FOR THE PAYMENT OF DEBT SERVICE ON THE BONDS. THE

OBLIGATION OF THE AUTHORITY TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON 3183
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THE BONDS DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE AUTHORITY IS

OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE AUTHORITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE AUTHORITY HAS NO TAXING POWER.

The Authority has assigned substantially all of its right, title and interest in the Installment Purchase Agreement to the Trustee pursuant to the Indenture, for the benefit of the Owners of the Bonds, including its right to receive Series 2024 Installment Payments and its rights as may be necessary to enforce payment of the Series 2024 Installment Payments when due.

Series 2024 Installment Payments Payable From Net Revenues All of the Authority Revenues and any other amounts (including proceeds of the sale of the Bonds) held in any fund or account established pursuant to the Indenture (except the Rebate Fund) have been irrevocably pledged to secure the payment of the principal of and interest, and the premium, if any, on the Bonds in accordance with their terms and the provisions of the Indenture. Such pledge constitutes a lien on and security interest in such amounts and will attach, be perfected and be valid and binding from and after the Closing Date, without any physical delivery thereof or further act, and will be valid and binding against all parties having claims of any kind in tort, contract or otherwise against the Authority, irrespective of whether such parties have notice hereof.

The obligation of the City to make the Series 2024 Installment Payments is payable solely from Net Revenues of the City’s Water System, which consist of Gross Revenues of the City’s Water System remaining after the payment of Maintenance and Operation Costs of the City’s Water System. In the Installment Purchase Agreement, the City transfers, places a charge upon, assigns and sets over to the Authority, all of the Net Revenues and all amounts in the Rate Stabilization Fund which are necessary to pay the Series 2024 Installment Payments in any Fiscal Year, and such portion of the Net Revenues is irrevocably pledged to the punctual payment of the Series 2024 Installment Payments. The Net Revenues will not be used for any other purpose while any of the Series 2024 Installment Payments remain unpaid, except that out of Net Revenues there may be apportioned and paid such sums for such purposes, as are expressly permitted by the Installment Purchase Agreement. Said pledge constitutes a first, direct and exclusive charge and lien on the Net Revenues and amounts in the Rate Stabilization Fund for the payment of the Series 2024 Installment Payments and all other Parity Bonds in accordance with the terms of the Installment Purchase Agreement.

The term “Gross Revenues” means all income, rents, rates, fees, charges and other moneys derived from the ownership of or operation of the Water System, including, without limiting the generality of the foregoing: (1) all in lieu charges and groundwater augmentation charges (including investment earnings thereon) collected by or on behalf of the City; (2) all income, rents, rates, fees, charges, business interruption insurance proceeds or other moneys derived by the City from the sale, furnishing and supplying of the water, drainage or other services, facilities, and commodities sold, furnished or supplied through the facilities of or in the conduct or operation of the business of the Water System, including connection fees, capacity charges and other charges for the connection of additional customers to the Water System; (3) the earnings on and income derived from the investment of such income, rents, rates, fees, charges, proceeds or other moneys, including City reserves; and (4) deposits to the Revenue Fund from amounts on deposit in the Rate Stabilization Fund in accordance with the Installment Purchase Agreement, but excluding in all cases: (v) development impact fees imposed pursuant to California Government Code § 66000 et seq.; (w) customers’ deposits or any other deposits or advances subject to refund until such deposits or advances have become the property of the City; (x) proceeds of taxes or benefit assessments restricted by law to be used by the City to pay amounts due on bonds or other obligations hereafter incurred; (y) any and all revenues derived from the ownership or operation of or in connection with, and pledged to, Separate Facilities; and (z) any Gross Revenues transferred from the Revenue Fund to the Rate Stabilization Fund in accordance with the Installment Purchase Agreement. 3184
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The term “Maintenance and Operation Costs” operating the Water System, calculated in accordance with sound accounting principles, and all reasonable and necessary expenses of management and repair and other expenses to maintain and preserve the Water System in good repair and working order, and including all reasonable and necessary administrative costs of the City attributable to the Water System and the Series 2024 Installment Payments, such as salaries and wages and the necessary contribution to retirement of employees, overhead, insurance, taxes (if any), expenses, compensation and indemnification of the Trustee, and fees of auditors, accountants, attorneys or engineers, and including all other reasonable and necessary costs of the City or charges required to be paid by it to comply with the terms of this Installment Purchase Agreement, but excluding (i) depreciation, replacement and obsolescence charges or reserves therefor and amortization of intangibles or other bookkeeping entries of a similar nature, (ii) payment of debt service on Parity Bonds or Subordinate Bonds, (iii) capital additions, replacements, betterments, extensions, or improvements to the Water System and (iv) charges payable to the City for a pipeline and right of way fee.

Notwithstanding anything contained in the Installment Purchase Agreement, the City is not required to advance any moneys derived from any source of income other than the Net Revenues (Except to the extent any such covenants are expressly payable from the Gross Revenues), the Rate Stabilization an and the other funds provided in the Installment Purchase Agreement for the payment of amounts due thereunder or for the performance of any agreements or covenants that are required to be performed by it contained therein. The City may, however, advance moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and may be legally used by the City for such purpose.

THE OBLIGATION OF THE CITY TO MAKE SERIES 2024 INSTALLMENT PAYMENTS

PURSUANT TO THE INSTALLMENT PURCHASE AGREEMENT DOES NOT CONSTITUTE AN

OBLIGATION FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.

THE OBLIGATION OF THE CITY TO MAKE THE SERIES 2024 INSTALLMENT PAYMENTS IS A

SPECIAL LIMITED OBLIGATION OF THE CITY PAYABLE SOLELY FROM NET REVENUES OF THE CITY’S WATER SYSTEM AND DOES NOT CONSTITUTE A DEBT OF THE CITY OR OF THE STATE

OR OF ANY POLITICAL SUBDIVISION THEREOF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.

Rate Covenant
The City will, to the fullest extent permitted by law, fix, prescribe, revise and collect Charges for the Water System during each Fiscal Year which are reasonably expected, at the commencement of each Fiscal Year, to be at least sufficient, after making allowances for contingencies and error in the estimates, to pay the following amounts in the following order: (1) all Maintenance and Operation Costs of the Water System estimated by the City to become due and payable in such Fiscal Year; (2) the Debt Service on the Series 2024 Installment Payments and any Parity Bonds; (3) all other payments required for compliance with the Installment Purchase Agreement and the Parity Bonds Instruments pursuant to which any Parity Bonds relating to the Water System shall have been issued; and (4) all payments required to meet any other obligations of the City which are charges, liens, encumbrances upon or payable from the Gross Revenues of the Water System or the Net Revenues of the Water System.

In addition, the City will fix, prescribe, revise and collect Charges for the Water System (inclusive of all Gross Revenues) during each Fiscal Year which are sufficient to yield Net Revenues of the Water System at least equal to 125% of the amounts payable under the preceding clause (2) in such Fiscal Year for the Series 2024 Installment Payments and Parity Bonds which have a lien on such Net Revenues. 3185
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No Reserve Fund
No debt service reserve fund or account has been established under the Indenture or the Installment Purchase Agreement in connection with the issuance of the Bonds.

Rate Stabilization Fund
There has been established with the City a fund to be known as the “Rate Stabilization Fund.” The City has agreed and covenanted in the Installment Purchase Agreement to maintain, so long as any Bonds remain outstanding, the Rate Stabilization Fund. There will be $__________ on deposit in the Rate Stabilization Fund as of the date of the initial issuance of the Bonds. The City may deposit amounts therein from time to time in its sole discretion.

Amounts in the Rate Stabilization Fund will be disbursed, allocated and applied by the City solely to the uses and purposes described in the Installment Purchase Agreement, and will be accounted for separately and apart from all other accounts, funds, money or other resources of the City.

The Rate Stabilization Fund and all amounts on deposit therein have been irrevocably pledged to the payment of the Series 2024 Installment Payments and Parity Bonds as provided in the Installment Purchase Agreement; provided that amounts on deposit in the Rate Stabilization Fund may be apportioned for such purposes as are expressly permitted therein. The foregoing pledge constitutes a first lien on amounts on deposit in the Rate Stabilization Fund for the payment of Series 2024 Installment Payments and Parity Bonds in accordance with the terms of the Installment Purchase Agreement.

The City may withdraw all or any portion of the amounts on deposit in the Rate Stabilization Fund from time to time and transfer such amounts to the Revenue Fund for application in accordance with the Installment Purchase Agreement. Amounts transferred from the Rate Stabilization Fund to the Revenue Fund pursuant to the Installment Purchase Agreement during or within 270 days after the end of a Fiscal Year may be taken into account as Gross Revenues for purposes of the calculations under the additional debt test or the rate covenant in such Fiscal Year to the extent provided in the definition of “Gross Revenues.” See the captions “—Rate Covenant” and “—Additional Parity Bonds.” Additional Parity Bonds
In addition to the Series 2024 Installment Payments, the City may, by Parity Bonds Instrument, issue Parity Bonds, to provide financing for the Water System, in such principal amount as determined by the City.

The City may issue or incur any such Parity Bonds subject to the following specific conditions, which are conditions precedent to the issuance and delivery of such Parity Bonds:
(a) The City shall be in compliance with all covenants set forth in the Installment Purchase Agreement.
(b) The Net Revenues of the Water System, calculated on sound accounting principles, as shown by the books of the City for the latest Fiscal Year or designated twelve-month period, plus, at the option of the City, any or all of the items described in clauses (i) and (ii) below, shall at least equal 125% of Debt Service with respect to the Series 2024 Installment Payments plus the Debt Service which would have accrued had the Parity Bonds been executed at the beginning of such Fiscal Year or designated 12 month period. The items any or all of which may be added to such Net Revenues for the purpose of issuing or incurring Parity Bonds hereunder are the following:
(i) Based on the report of an Independent Consultant, an allowance for Net Revenues from any additions to or improvements or extensions of the Water System to be made with the proceeds of such Parity Bonds, and also for Net Revenues from any such additions, improvements or extensions which 3186
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have been made from moneys from any source but in any case which, during all or any part of such Fiscal Year, were not in service, all in an amount equal to 90% of the estimated additional average annual Net Revenues to be derived from such additions, improvements and extensions for the first 36 month period in which each addition, improvement or extension is respectively to be in operation; and (ii) Based on the report of an Independent Consultant, an allowance for earnings arising from any increase in the Charges which has become effective prior to the incurring of such additional indebtedness but which, during all or any part of such Fiscal Year, was not in effect, in an amount equal to the amount by which the Net Revenues would have been increased if such increase in Charges had been in effect during the whole of such Fiscal Year.
(c) The Parity Bonds Instrument providing for the issuance of such Parity Bonds Installment Purchase Agreement must provide that:
(i) The proceeds of such Parity Bonds shall be applied to the acquisition, construction, improvement, financing or refinancing of additional facilities, improvements or extensions of existing facilities within the Water System, or otherwise for facilities, improvements or property which the City determines are of benefit to the Water System, or for the purpose of refunding any Series 2024 Installment Payments or Parity Bonds in whole or in part, including all costs (including costs of issuing such Parity Bonds and including capitalized interest on such Parity Bonds during any period which the City deems necessary or advisable) relating thereto;
(ii) Interest on such Parity Bonds shall be payable on a Series 2024 Installment Payment Date unless such Parity Bonds are owed to an agency of the State of California, in which case they may be payable on any date;
(iii) The principal of such Parity Bonds shall be payable on August 1 in any year in which principal is payable unless such Parity Bonds are owed to an agency of the State of California, in which case they may be payable on any date; and
(iv) Money or a surety bond may be, but shall not be required to be, deposited in a reserve account for such Parity Bonds from the proceeds of the sale of such Parity Bonds or otherwise in such amount as may be determined by the City.

THE CITY
General
The City is located in southwestern San Bernardino County (the “County”), approximately 35 miles east of Los Angeles near the intersection of Interstates 10 and 15 in the area of southern California known as the “Inland Empire.” The City is adjacent to the cities of Upland, Montclair, Chino and Rancho Cucamonga.

The City had a population of approximately 181,224 as of January 1, 2024 and covers approximately 50 square miles. The City was incorporated in 1891 and is a general law city operating under a council/manager form of government. Land use in the City is primarily residential, with areas of commercial and industrial development. See the caption “—Land Use and Service Area.” The City provides a full range of services, including police and fire protection, construction and maintenance of streets, parks, water and sewer lines, traffic signals and other infrastructure, water, sewer and integrated waste services, recreation and community services and arts, cultural and social programs. The City also operates a municipal golf course, a convention center and a sports and entertainment arena (the Toyota Arena, which opened in 2008).
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The City supplies potable water to approximately 34,145 single family and multi-family residential connections and potable and recycled water to approximately 4,288 commercial, industrial, irrigation and other connections.

The Water System includes 17 active groundwater wells and five inactive groundwater wells in the Chino Basin, 12 reservoirs with a total combined storage capacity of approximately 75 million gallons, six booster stations, 18 pressure regulating stations and approximately 618 miles of potable water pipelines varying in size from 2 inches to 42 inches, as well as approximately 56 miles of recycled water pipelines. The City maintains nine interconnections with neighboring water systems to ensure a stable water supply during emergencies or other disruptions to the Water System. Two proposed new wells are expected to be added by 2028.

In addition to wellhead treatment facilities which the City operates at City-owned groundwater wells, the City owns treatment capacity in the WFA’s Agua de Lejos Water Treatment Plant (the “WFA Treatment Plant”), which treats imported SWP water, and in CDA facilities, which treat local brackish groundwater, in each case along with other regional partners.

Land Use and Service Area
The Water System provides retail water service to the majority of the City’s territory, including a population of approximately 181,224. Certain customers in the northern portion of the City are served by CVWD. The City includes two distinct areas: (i) Old Model Colony, which consists of residential, commercial and industrial development, including Ontario International Airport, and which is largely built out; and (ii) Ontario Ranch, which was annexed to the City in 1999 and which is being developed into residential, commercial, industrial and public uses. According to the City’s 2020 Urban Water Management Plan, the Water System is expected to serve a projected population of approximately 362,903 by the year 2045.

The Water System service area encompasses single family and multi-family residences as well as areas of commercial, industrial and public land uses. With the exception of certain properties that have privately owned wells, all of the land within the Water System service area is served by the Water System.

New residents and businesses in the Water System service area are required to connect to the Water System and to assign private water rights to the City in exchange for the City’s agreement to provide new or expanded water service.

Seismic Considerations
The City is located in a seismically active region. Significant faults are located near the City, including the San Andreas, Chino, Red Hill, Rialto-Colton, Cucamonga, Elsinore and Whittier Faults. There is potential for destructive ground shaking during the occurrence of a major seismic event. In addition, land along fault lines may be subject to liquefaction during the occurrence of such an event. In the event of a severe earthquake, there may be significant damage to both property and infrastructure within the City, including the Water System. The City has an emergency operations center that would be activated under such circumstances.
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Newer Water System facilities are designed to withstand earthquakes with minimal damage, as earthquake loads are taken into consideration in the design of project structures. The City has also undertaken a vulnerability assessment of critical Water System facilities. The vulnerability assessment ranks Water System infrastructure by importance, builds redundancy into existing operations and includes contingency plans in the event of damage to City assets and succession plans for critical staff. The impact of lesser magnitude events is expected by the City to be temporary, localized and repairable. The Water System has never sustained major damage to its facilities or experienced extended incidences of service interruptions as a result of seismic disturbances.

The City does not maintain earthquake insurance on Water System facilities. See the captions “—City Insurance” and “CERTAIN RISKS TO BONDHOLDERS—Natural Disasters.” Governance and Management
General. The City operates under a council-manager form of government. Councilmembers and the Mayor are currently elected at large for four-year alternating terms. The City Treasurer and City Clerk are also elected by City voters. Beginning with the November 5, 2024 Statewide election, two Councilmembers will be elected by district, with the other two Councilmembers elected by district at the November 3, 2026 Statewide election; the Mayor will continue to be elected Citywide.

The City Manager, appointed by the City Council, serves as the City’s chief administrative officer and is responsible for overseeing the daily operations of City departments and efficient management of all City business. Functions of the City Manager’s Office include coordination of the implementation of City Council policies and programs; providing overall direction to the departments that administer City programs and services; coordinating intergovernmental relations and legislative advocacy; and administration of the City’s communications, media relations and public information programs.

Scott Ochoa has served as the City Manager since October 2017. In this capacity he leads the daily operation of City government. Prior to coming to the City, Mr. Ochoa served as the City Manager of Glendale, California and Monrovia, California. Mr. Ochoa has a Bachelor’s degree from Claremont McKenna College and a Masters in Public Administration degree from the University of Southern California.

Other key personnel responsible for management of the Water System include the City Treasurer, the Executive Director of Finance, the Utilities General Manager and the Utilities Administrative Services Manager. In addition, the City Attorney provides legal services to the City and the Authority.

James R. Milhiser has served as the elected City Treasurer since 1998. Mr. Milhiser has over 40 years of experience in financial services. He has a Bachelor’s degree from California State Polytechnic University, Pomona, and successfully completed a three year program at Pacific Coast Banking School, held at the University of Washington.

Armen Harkalyan serves as the Executive Director of Finance of the City. Mr. Harkalyan was appointed Executive Director of Finance in January 2019. Prior to coming to the City, Mr. Harkalyan served as the Deputy Director of Finance and Revenue Manager for the City of Glendale, California. Mr. Harkalyan has a Bachelor’s degree from the California State University, Los Angeles, and a Master’s degree from the University of Phoenix.

Scott Burton serves as the Utilities General Manager of the City. Mr. Burton was appointed Utilities General Manager in 2011 and has been with the City since 2000. Prior to coming to the City, Mr. Burton served as a Senior Utilities Engineer with Yorba Linda Water District. Mr. Burton has a Bachelor’s degree in Civil Engineering from California State Polytechnic University and is a registered professional engineer. 3189
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Michael Sigsbee serves as the Utilities Administration and Customer Service Assistant General Manager of the City. Prior to coming to the City, Mr. Sigsbee served as the Assistant Finance Director of the City of Bellevue, Washington. Mr. Sigsbee has held various titles with the City since he was appointed Administrative Officer in 2002. Mr. Sigsbee has a Bachelor’s degree from California State Polytechnic University, Pomona, and a Master’s of Public Administration degree from California State University, Sacramento.

Albert Gastelum serves as the Utilities Engineering and Utilities Operations Assistant General Manager of the City. Prior to coming to the City, Mr. Gastelum spent 32 years with the Los Angeles Department of Water and Power’s Water System, where he most recently served as the Director of Water Quality, and as the Manager of Project Engineering. Mr. Gastelum has a Bachelor’s degree in Mechanical Engineering from California State Polytechnic University, Pomona and is a registered professional engineer.

Ruben Duran has been City Attorney since 2020. Mr. Duran has been an attorney for more than 22 years in private practice specializing in municipal law. He has a Bachelor’s degree from the University of California, San Diego and a Juris Doctorate degree from University of California, Hastings.

Management Policies. The City has adopted several policies which are designed to ensure the prudent and effective management of City operations, including a Fund Balance Reserve Policy, Debt Management Policy, Capital Asset Management Policy, Economic Uncertainty Reserve, Strategic Plan, Cost Allocation Plan and Investment Policy. Further information about these policies is set forth below.

Fund Balance Reserve Policy. The City Council has adopted a Fund Balance Reserve Policy that forms the overall framework within which the City’s General Fund operating budget is formulated. The Fund Balance Reserve Policy establishes the procedures for reporting unrestricted fund balances in the General Fund financial statements. Certain commitments and assignments of the fund balance will help ensure that there will be adequate financial resources to protect the City against unforeseen circumstances and events such as revenue shortfalls and unanticipated expenditures. The policy also authorizes and directs the Financial Services Agency to prepare financial reports which accurately categorize fund balance in accordance with applicable accounting standards.

It is also the City Council’s goal for a minimum of 20% of annual General Fund appropriations to be designated as an Assigned Fund Balance in the General Fund. These amounts are intended to be used for specific and defined emergency events, such as an earthquake, to address immediate needs in resources without impacting City services and to minimize the potential for disruption of municipal services to its citizens.

As discussed under the caption “SECURITY FOR THE BONDS—Series 2024 Installment Payments Payable from Net Revenues,” the 2024 Bonds are payable solely from Net Revenues of the City’s Water System and General Fund moneys are neither pledged to nor available for the payment of the 2024 Bonds.

Debt Management Policy. The City has adopted a Debt Management Policy in accordance with California Government Code Section 8855 to establish guidelines and parameters for the effective governance, management and administration of debt issued by the City and its related entities and to ensure compliance with legislation, statutes and laws that place regulations on local agency debt. The following elements have been incorporated into this policy:
• The purposes for which debt may be incurred.
• The types of debt that may be issued.
• Assessment of debt limits generally and for General Fund-supported debt. 3190
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• Debt structuring and issuance practices.
• Debt management practices, including the investment of proceeds and post-issuance compliance.

Capital Asset Management Policy. The City’s Capital Asset Management Policy is intended to: (1) describe the policies and procedures utilized in the City’s capital asset management system; (2) establish guidelines for accounting and depreciating the City’s fixed assets; and (3) list and describe suitable fixed assets and their estimated useful life. The primary goals of the Capital Asset Management Policy are: (i) to ensure that the City’s fixed assets are properly accounted for; (ii) to establish a consistent and cost-effective method for accounting for the City’s fixed assets; and (iii) to assure compliance with generally accepted accounting principles applicable to public agencies (“GAAP”).

Economic Uncertainty Reserve. The City established an Economic Uncertainty Reserve in the fiscal year ended June 30, 2020, with an initial amount of $20,000,000 to smooth out revenue and expenditure contingencies during economic downturns. As of June 30, 2023, the balance in the Economic Uncertainty Reserve was $20,000,000.

Strategic Plan. The City’s Strategic Plan, which serves as a framework for developing the City’s budget, includes the following goals established by the City Council:
• Invest in the Growth and Evolution of the City’s Economy. • Maintain the Current High Level of Public Safety.
• Operate in a Businesslike Manner.
• Pursue City’s Goals and Objectives by Working with Other Governmental Agencies. • Focus Resources in Ontario’s Commercial and Residential Neighborhoods. • Invest in the City’s Infrastructure (Water, Streets, Sewers, Parks, Storm Drains and Public Facilities).
• Encourage, Provide or Support Enhanced Recreational, Educational, Cultural and Healthy City Programs, Policies and Activities.
• Ensure the Development of a Well Planned, Balanced, and Self-Sustaining Community in Ontario Ranch.

Cost Allocation Plan. The City’s Cost Allocation Plan is a basic information tool in a number of financial and budgetary decision-making situations. The Cost Allocation Plan can be used to identify indirect costs incurred by the City in administering and providing support services to special projects, funds and contracts. By identifying total project costs, the Cost Allocation Plan can be used to determine the level of support and to reimburse the General Fund for the indirect costs incurred.

An indirect cost rate is a means for determining fairly and conveniently, within the boundaries of sound administrative principles, what proportion of indirect costs each project or activity should bear. It is the ratio of total indirect expenses to a direct cost base. By applying the indirect cost rate to any particular cost objective, the total cost of the project or activity can be calculated. Indirect costs are categorized as Departmental Overhead and General & Administrative (“G&A”) expenses. Departmental Overhead is allocated on the basis of direct personnel costs, while G&A is allocated based on the total project or activity costs (excluding G&A).
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The Cost Allocation Plan is utilized in charging the City’s utility funds, including Water Enterprise Fund, for the costs of General Fund administrative activities that benefit such utility funds. The Cost Allocation Plan is updated on an annual basis.

Investment Policy. The City invests its funds in accordance with the City’s investment policy (the “Investment Policy”), which was most recently reviewed and revised by the City Council on December 5, 2023. The Investment Policy: (a) describes the policies and procedures to be utilized in the City’s investment management system; (b) establishes guidelines for the prudent investment of the City’s funds, and (c) lists and describes suitable investments. The goals of the City’s investment policy and investment management function are compliance with law, enhancement of the economic status of the City and protection of the City’s funds by limiting credit and market risks.

In accordance with Section 53600 et seq. of the California Government Code, idle cash management and investment transactions are the responsibility of the City Treasurer. Eligible investments are generally limited to the Local Agency Investment Fund which is operated by the California State Treasurer, local agency bonds, United States Treasury bills, notes and bonds, obligations issued by United States Government agencies, FDIC insured or negotiable certificates of deposit, repurchase agreements, banker’s acceptances and commercial paper rated A1/P1, as applicable, or better, and issued by a domestic corporation having assets in excess of $500 million. Funds are invested in the following order of priority:
• Safety of Principal;
• Liquidity; and
• Return on Investment.

The City Treasurer is required to provide a quarterly report to the City Manager and the City Council showing the type of investment, date of maturity, amount invested, current market value, rate of interest, and other such information as may be required by the City Council.

Approximately $70.3 million (8.7%) of the City’s total investment portfolio as of June 30, 2023 was attributed to the Water Enterprise Fund.

Employees
As of June 30, 2023, the City had approximately 1,517 full-time equivalent employees, of which 140 worked for the City’s Municipal Utilities Company (serving both the Water System and the City’s municipal wastewater system) and 1,377 worked in general government services, including finance. City employees are represented by seven labor associations which collectively represent approximately 1,325 employees.

Relations between the City and its labor associations are governed by memoranda of understanding (each, an “MOU”) that expire on June 30, 2027, with the exception of the American Federation of State, County and Municipal Employees Local 3061 (“AFSCME”), which has an MOU which expires on June 30, 2026, and the Association of Ontario Management Employees (“AOME”), which has an MOU which expires on June 30, 2025. A total of approximately 192 management and confidential employees are exempt from collective bargaining. Salaries for exempt employees are set by the City Council. The City has never experienced a strike, slowdown or work stoppage.

Budget Process
The Ontario Municipal Code requires that the City Manager present the annual operating budget to the Mayor and City Council for approval. The City’s Financial Services Agency (i.e., department), under the direction of the Executive Director of Finance, is responsible for compiling the estimated revenues and 3192
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appropriations for the City Manager. Prior to the beginning of each Fiscal Year, the Mayor and City Council adopts the Annual Operating Budget at a public budget workshop.

The development of the Annual Operating Budget begins in February with the dissemination of budget preparation guidelines, including policies and procedures to ensure that the preparation of the budget conforms to fiscal policies and guidelines established by the Mayor and City Council. Following the distribution of the budget development guidelines, a budget “kick-off’ meeting is held with department heads and other key City staff members to review the budget development guidelines.

Before department budget requests are submitted to the City Manager, the Financial Services’ Budget Office reviews and analyzes all department budget requests. This review includes a comparative analysis of historical and current expenditure levels. The City Manager and Budget Office staff then hold budget meetings with each department head to discuss the budget requests and obtain additional information to assist in the assessment of the requests. Following the meetings, the Budget Office adjusts line item requests in accordance with the City Manager’s direction. Finally, the budget is presented to the Mayor and City Council for consideration and approval at a public budget workshop.

The City Council can make amendments to an adopted budget at any time during a Fiscal Year.

Quarterly budget update reports include appropriation adjustments and revised revenue projections as needed.

The City Manager may authorize budget transfers between line items, programs and agencies within a fund as long as the total budget has not exceeded the amount approved by City Council. Budgetary changes between funds require City Council approval.

The City Council adopted the budget for Fiscal Year 2025 on June 17, 2024.

City Insurance
The City is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors and omissions, injuries to employees and natural disasters. The City has established selfinsurance funds to finance uninsured risks of loss up to a maximum of $750,000 for each workers’ compensation claim and $1,000,000 for each general liability claim. For workers’ compensation claims in excess of amounts provided by its internal fund, the City maintains coverage from a private carrier for claims up to the statutory requirements. For general liability claims in excess of amounts provided by its internal fund, the City maintains coverage from the Authority for California Cities Excess Liability (“ACCEL”).

ACCEL maintains a shared risk pool for claims up to $4,000,000, with private carriers covering amounts in excess thereof. City is self-insured for unemployment liability claims. The City will pay all claims based on the individual reimbursement account method, as provided by the State of California. Claims have not exceeded the City’s insurance coverage in any of the last three years.

The City purchases all-risk, replacement cost value property insurance coverage through ACCEL up to a maximum amount of $500,000,000, including a $750,000 sublimit for unscheduled assets. Certain portions of the Water System, including pipelines that are located more than 1,000 feet from City-owned above-ground infrastructure, are not covered by the City’s property insurance except for the $750,000 sublimit that is described in the previous sentence. In addition, the City does not maintain insurance coverage for earthquake damage. See the caption “CERTAIN RISKS TO BONDHOLDERS—Natural Disasters.” No assurance can be given as to the adequacy of the insurance maintained now or in the future by the City to fund necessary repairs or replacement of any portion of the Water System, and the City does not have any obligation under the Indenture to maintain earthquake coverage or other coverage in the current coverage amounts. Significant damage to the Water System could affect the City’s ability to generate sufficient Net Revenues to pay the 2024 Bonds. See the caption “CERTAIN RISKS TO BONDHOLDERS—Natural Disasters.”
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The City has not paid or settled any claims that exceeded its insurance coverage in the past three years.

See Appendix B under the caption “COVENANTS OF THE CITY—Insurance” for a description of insurance coverages that are required to be maintained while the 2024 Bonds are outstanding.

Outstanding Parity Obligations
No Senior Obligations. The City has no outstanding obligations that are payable from Net Revenues of the Water System on a senior basis to the 2024 Bonds. 2021 Bonds. On December 2, 2021, the City issued its Water Revenue Refunding Bonds, Series 2021 (Federally Taxable) (the “2021 Bonds”) in the original aggregate principal amount of $67,550,000, of which $62,625,000 was outstanding as of June 30, 2024. The 2021 Bonds mature in 2043 and bear interest at rates between 0.541% and 2.949% per annum. The 2021 Bonds are payable from Net Revenues on a parity with the 2024 Bonds.

Additional Parity Obligations. The City is permitted to incur additional obligations that are payable from Net Revenues on a parity with the 2024 Bonds in the future upon satisfaction of the conditions that are described under the caption “SECURITY FOR THE BONDS—Additional Parity Bonds.” Financial Statements
A copy of the most recent audited financial statements of the City prepared by Badawi & Associates, CPAs (the “Auditor”) is set forth in Appendix A. The Auditor’s letter dated _____, 2024 is located at the beginning of the Financial Section therein.

The summary operating results that are contained under the caption “WATER SYSTEM FINANCIAL INFORMATION—Historical Operating Results and Debt Service Coverage” are derived from these financial statements and audited financial statements for prior Fiscal Years (excluding certain non-cash items and after certain other adjustments), and are qualified in their entirety by reference to such statements, including the notes thereto.

The City accounts for moneys received and expenses paid in accordance with GAAP. Generally, the City recognizes revenues and expenses on the full accrual basis of accounting, meaning that revenues are recognized in the accounting period in which they are earned and expenses are recognized in the period in which they are incurred, regardless of when the related cash flows take place. However, in certain cases, GAAP requires or permits moneys that are collected in one Fiscal Year to be recognized as revenue in a subsequent Fiscal Year and requires or permits expenses that are paid or incurred in one Fiscal Year to be recognized as expenses in a subsequent Fiscal Year. See Note 1.c to the financial statements that are set forth in Appendix A. Except as otherwise expressly noted herein, all financial information that has been derived from the City’s audited financial statements reflects the application of GAAP.

The Water Enterprise Fund of the City has a separate set of self-balancing accounts and is accounted for as a proprietary fund type (enterprise fund) using the economic resources measurement focus. In governmental accounting, enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis are to be financed or recovered primarily through user charges, or where periodic determination of revenues earned, expenses incurred and/or net income is deemed appropriate for capital maintenance, public policy, management control, accountability or other purposes.
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THE WATER SYSTEM
General
The City supplies potable water to approximately 34,145 single family and multi-family residential connections and potable and recycled water to approximately 5,580 commercial, industrial, irrigation and other connections. See the caption “—Historical Water System Connections.” The City’s water sources include: (i) groundwater pumped from City-owned wells in the Chino Basin; (ii) imported SWP water which the City purchases from WFA; (iii) desalted groundwater which the City purchases from CDA; (iv) groundwater and/or surface water which the City purchases from SAWCO; and (v) recycled water which the City purchases from IEUA. See the caption “—Water Supply” for a detailed description of the City’s various water sources.

The City’s Water Master Plan also anticipates the construction of a total of seven new groundwater wells by 2040 to serve development in Ontario Ranch (as discussed under the caption “THE CITY—Land Use and Service Area”). There can be no assurance that such wells will be constructed as currently contemplated.

In addition to wellhead treatment facilities which the City operates at City-owned groundwater wells, the City owns treatment capacity in the WFA Treatment Plant, which treats imported SWP water, and in CDA facilities, which treat local brackish groundwater, in each case along with other regional partners.

Water Quality
General.

The Water System’s largest water source is groundwater which the City pumps from City-owned wells in the Chino Basin. Although the quality of such water is generally good, the City does maintain wellhead treatment facilities for City-owned wells to treat nitrate and perchlorate concentrations when such contaminants are 80% or more of the regulatory drinking water standard. Additionally, CDA extracts groundwater from the lower portion of the Chino Basin and treats for nitrate, total dissolved solids, perchlorate, 1,2,3-Trichloropropane, trichloroethylene and perchloroethylene.

The presence of such contaminants in limited concentrations is typical of groundwater in the Chino Basin and reflects agricultural land uses as well as past industrial practices on the land overlying the Chino Basin. The City has previously deactivated wells when high levels of contaminants were detected at 80% or more of the regulatory drinking water standard. Alternatively, the City has constructed replacement wells at other locations where contaminant levels were naturally below the regulatory drinking water standard or constructed treatment facilities using state approved technologies for contaminant reduction. In the event that the City were compelled to take similar action in the future, the City does not anticipate that there would be a material effect on its ability to generate sufficient Net Revenues to pay the 2024 Bonds.

Salinity levels also affect portions of the groundwater within the Chino Basin, although this is not a significant source of concern for the City’s wells.
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Water from the City’s other sources of potable supply, including purchases of imported SWP water (treated by WFA), desalted groundwater from CDA and groundwater purchased from SAWCO, is in each case treated prior to introduction to the Water System and meets all applicable regulatory standards. Similarly, the City’s recycled water supplies, which are purchased from IEUA and CVWD, are suitable for landscape irrigation under Title 22 of the California Code of Regulations.

Per- and polyfluoroalkyl substances (“PFAS”). In 2019, the State of California Water Resources Board’s Division of Drinking Water (the “Division”) lowered the Notification Levels (the “NLs”) for Perfluorooctanoic acid (“PFOA”) and Perfluorooctanesulfonic acid (“PFOS”) to 5.1 and 6.5 parts per trillion (“PPT”), respectively. NLs are non-regulatory, precautionary health-based measures for concentrations of chemicals in drinking water that warrant notification and further monitoring and assessment. In 2020, the Division lowered the Response Level (the “RL”) for PFOA and PFOS from 70 PPT, combined, to 10 and 40 PPT, respectively. RLs are non-regulatory, precautionary health-based measures that are set at higher levels than NLs and represent thresholds at which the Division recommends that water systems remove a water source from use or treat it. In April 2024, the US Environmental Protection Agency (“US EPA”) announced primary drinking water standards for 5 individual PFAS chemicals and a PFAS chemical mixture, effective June 25, 2024. The US EPA set individual limits for PFOA at 4.0 PPT, PFOS at 4.0 PPT, perfluorohexanesulfonic acid (“PFHxS”) at 10 PPT, perfluorononanoic acid (“PFNA”) at 10 PPT, and hexafluoropropylene oxide dimer acid (“HFPO-DA”), also known as Gen-X, at 10 PPT, and a health-based water concentration limit (Hazard Index) at 1 (unitless) for four PFAS chemicals when present as a mixture.

The Hazard Index (HI) regulatory drinking water standard defines when the combined levels of two or more of these four PFAS, PFHxS, PFNA, HFPO-DA, and perfluorobutanesulfonic acid (“PFBS”), are greater than 1, requires action. Since the HI is made up of a sum of fractions, each fraction compares the level of each PFAS measured in the water to their health-based water concentrations. The HI indicates a level at which no known or anticipated adverse effects on the health of persons occur and allows for an adequate margin of safety with respect to health risk associated with a mixture of PFAS in finished drinking water.

PFOA and PFOS are fluorinated organic chemicals which are part of a family of synthetic compounds referred to as PFAS. PFAS are water and oil resistant substances that were previously used in a variety of manufacturing processes, including consumer products, and industrial applications. They are often present in water supplies which are impacted by wastewater treatment plant effluents, landfills, airports, or active or former military installations. The City understands that recent technological advances have enabled water agencies to detect PFAS compounds at very low concentrations.

To date, PFAS has been detected in the City’s groundwater wells, in the Chino Basin, at low-level concentrations. The City’s goal is to ensure that all drinking water served to customers does not contain PFAS in amounts above the regulatory drinking water standards. The City monitors PFAS in its groundwater wells at locations within a 2 mile radius of an airport, landfill, or previous groundwater source(s) that have resulted in PFAS detections from the 3rd edition of the Unregulated Contaminant Monitoring Rule (“UCMR”).

Additionally, the City monitored for 29 PFAS chemicals at its entry points to the distribution system during the 5th edition of UCMR where PFAS was detected at low-level concentrations but below the regulatory drinking water standard. To date, PFAS has not been detected in the City’s groundwater wells in the Chino Basin in concentrations above the NLs for PFOA and PFOS. The City’s goal is to ensure that all drinking water served to customers does not contain PFAS in amounts which are above the NLs (which are lower than the RLs). The City has tested the water within its distribution system for PFAS under the UCMR3 (Unregulated Contaminant Monitoring Rule) and the Division’s 2018 Monitoring Order, resulting in a “non-detect” determination.

The City also notes that: (i) imported SWP and treated water from SAWCO do not contain PFAS; and (ii) CDA’s desalting processes treats groundwater using a reverse osmosis process, which removes PFAS.

The City does not anticipate that implementation of the lowered PFAS RL by the Division will have a material adverse effect on the operation of the Water System or the costs thereof. The projected operating results which are set forth under the caption “WATER SYSTEM FINANCIAL INFORMATION—Projected 3196
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Operating Results and Debt Service Coverage” do not assume significant increases in water treatment or other Water System operating costs to meet Federal drinking water regulations relating to PFAS.

Water Supply
The City has five sources of water: (i) groundwater pumped from City wells in the Chino Basin, as discussed under the subcaption “—Groundwater” below; (ii) imported SWP water which the City purchases from WFA, as discussed under the subcaption “—Imported Water” below; (iii) desalted groundwater which the City purchases from CDA, as discussed under the subcaption “—Desalter Water” below; (iv) groundwater and surface water which the City purchases from SAWCO, as discussed under the subcaption “—SAWCO” below; and (v) recycled water which the City purchases from IEUA, as discussed under the subcaption “— Recycled Water” below).

See the captions “—Historical Water System Supply” and “—Projected Water System Supply” for historical and projected information with respect to the City’s sources of water supply.

Groundwater. The City is entitled to pump approximately 29,461 acre feet of groundwater per year as a party to the Appropriative Pool (as discussed below), and an additional 1,151 acre feet of groundwater per year as a party to the Non-Agricultural Pool (as discussed below), from the Chino Basin without paying a replenishment assessment. The actual amount that is available to be pumped in any year varies based on the safe yield of the Chino Basin and other factors as described below. Groundwater is extracted from 17 currently active City-owned wells in the Chino Basin.

Approximately 56% (16,386 acre feet) of the Water System’s potable water supply in Fiscal Year 2023 was pumped from City-owned wells in the Chino Basin. Under a program known as the Conjunctive Use Program, the City has entered into water storage agreements which permit storage of imported surface water and recycled water in the Chino Basin, with such water to be extracted during dry hydrological years in lieu of importing SWP water. The City did not extract any water under the Conjunctive Use Program in Fiscal Year 2023.

The Chino Basin is managed by the Chino Basin Watermaster (the “Watermaster”), which seeks to optimize the Chino Basin’s safe yield, provide replenishment supplies to offset overproduction and levy and collect administrative and replenishment assessments. The Watermaster was created pursuant to the terms of a January 27, 1978 judgment (the “Judgment”) entered in Superior Court of California, County of San Bernardino (the “Court”) Case No. RCV 51010 (formerly Case No. SCV 164327) entitled Chino Basin Municipal Water District v. City of Chino, et al. The Watermaster administers the Judgment and provides a forum for Chino Basin stakeholders to work cooperatively in managing the Chino Basin to meet regional water supply needs.

The Judgment established the following three pool committees:
(1) the Agricultural Pool, which includes the State and all overlying producers of water for uses other than industrial or commercial purposes; allocations to this pool are expected to decrease over time as formerly agricultural land (including land within the City in Ontario Ranch, as discussed under the caption “THE CITY—Land Use and Service Area”) is developed for non-agricultural uses; (2) the overlying Non-Agricultural Pool, which represents producers of water for industrial or commercial purposes, and through which the City currently has annual base extraction rights of approximately 3,921 acre feet of water per year, or approximately 53% of the total extraction rights; such water can be used to supply water to City-owned property and is not available for delivery to Water System customers; and (3) the Appropriative Pool, which represents the City and other cities, districts, public and private utilities and certain other users; the City currently has annual base extraction rights of approximately 8,470 3197
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acre feet of water per year from the Appropriative Pool, or approximately 21% of the total extraction rights; allocations to this pool are expected to increase over time as formerly agricultural land (including land within the City in Ontario Ranch, as discussed under the caption “THE CITY—Land Use and Service Area”) is developed for non-agricultural uses; currently, the City has additional rights to approximately 5,866 acre feet of water per year as a result of such land use conversions. Such amount is expected to increase as land continues to be developed.

The representatives of the pool committees constitute an Advisory Committee that advises the Watermaster’s nine member board, which is comprised of representatives of each of the three pools as well as representatives from the wholesale water agencies within the Chino Basin.

The Judgment was amended in 2000 through the signing of the Peace Agreement, which, among other things, established procedures to implement an Optimum Basin Management Program (the “OBMP”) to preserve and enhance the Chino Basin’s safe yield and water quality through the construction of desalters and other measures, and again in 2007 through the signing of the Peace II Agreement, which, among other things, provided for the expansion of desalters to treat groundwater degraded by past agricultural practices.

Watermaster staff provide accounting services for water appropriations and groundwater storage, groundwater monitoring services, services related to the implementation of special projects within the Chino Basin service area and services related to the purchase of replenishment water, when available. The Watermaster’s operations are governed by the Judgment, the OBMP, the Peace Agreement, the Peace II Agreement and rules and regulations approved by the Watermaster’s board. The Watermaster is considered an arm of the Court and reports to the Court on a regular basis as part of the Court’s ongoing jurisdiction to enforce the Judgment.

The Watermaster estimates that the Chino Basin, which is approximately 235 square miles in area, currently holds approximately 5,000,000 acre feet of water and has an additional 1,000,000 acre feet of unused capacity. The amount of groundwater held in the Chino Basin fluctuates depending upon precipitation, pumping demand and the availability of replenishment water. Replenishment water has not been available in every year, resulting in limitations on the Watermaster’s ability to recharge the Chino Basin. However, local replenishment supplies have been available in the form of purchases of water held in local storage accounts to offset overproduction. In addition, individual agencies, including the City, have the ability to purchase recycled water to offset their overproduction.

For Fiscal Year 2023, the amount of native groundwater available for pumping was approximately 131,000 acre feet. If the City’s production is in excess of the City’s appropriative rights, the City may utilize water that it has stored in the Chino Basin, purchase water from another Chino Basin groundwater producer or pay the Watermaster a replenishment assessment fee in the current amount of $741 per acre foot. In addition, the City pays the Watermaster administrative and OBMP assessments based on prior year production. Such assessments were equal to $42.39 and $55.08 per acre foot, respectively, for Fiscal Year 2023. The assessments provide funding for Watermaster staffing, administrative overhead costs and the Watermaster’s implementation of the OBMP.

Pursuant to the Judgment, the City’s current annual Chino Basin base extraction rights are approximately 8,470 acre feet of groundwater as a party to the Appropriative Pool and an additional 3,921 acre feet of groundwater annually as a party to the Non-Agricultural Pool. However, the City’s total annual appropriative rights in the Chino Basin vary based on the safe yield of the Chino Basin, the Watermaster’s allocation of unused Agricultural Pool rights, the City’s annual purchases from other producers and other factors. Based on the foregoing factors, the amount that is actually available for pumping is currently approximately 30,612 acre feet per year. The City usually underproduces its available appropriative rights in any given year.
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The City also purchases recycled water from IEUA, and has a contract right to purchase up to 3,000 acre foot per year share of recycled water that is allocated to the City of Fontana, another IEUA member, in each case for the purpose of recharging the Chino Basin. In Fiscal Year 2023, the City purchased 2,903 acre foot of recycled water from the City of Fontana, and its recycled water credits totaled 6,523 acre feet into the City’s Chino Basin storage account. The City can elect not to purchase any recycled water from the City of Fontana due to storage limitations as happened in Fiscal Year 2021. Any such purchases in future years will be credited to the City’s Chino Basin storage account. The City’s contract with the City of Fontana runs through 2030, with a 10-year extension available at the City’s request.

As of June 30, 2023, the City had a total of 123,135 acre feet of water in its Chino Basin storage account, including recycled water and imported supplies, stormwater recharge credits, rights arising from the City’s ownership of SAWCO shares (as discussed under the subcaption “—SAWCO” below) and purchases of stored water from other Chino Basin groundwater producers.

In 2019, the City entered into an agreement under which the City permanently acquired 955 acre feet of overlying Non-Agricultural Pool groundwater rights of a private water producer called GenOn California South LP, as well as approximately 3,740 acre feet of stored groundwater, for a total purchase price of $14.1 million. This acquisition and the associated payments were completed in Fiscal Year 2021.

As an adjudicated groundwater basin, the Chino Basin is not subject to the provisions of Assembly Bill No. 1739 and Senate Bill Nos. 1168 and 1319 (collectively, the Sustainable Groundwater Management Act, or “SGMA”), which was enacted on September 16, 2014. The SGMA constitutes a legislative effort to regulate groundwater on a Statewide basis.

Imported Water. Approximately 14% (4,055 acre feet) of the Water System’s potable water supply in Fiscal Year 2023 was SWP water that the City purchased from WFA.

WFA was created on February 19, 1980 pursuant to a joint powers agreement (the “WFA Joint Powers Agreement”) among the City, Monte Vista Water District and the cities of Chino, Chino Hills and Upland. WFA is located in the City of Upland and is governed by a five-member board to which the City is entitled to appoint one representative. The City owns a 25 million gallon per day (“mgd”) capacity interest in the WFA Treatment Plant, which is operated by WFA.

Under the terms of the JPA Agreement, WFA collects from the City: (i) fixed and variable operating costs of WFA (primarily related to the SWP, as discussed below), which costs are not limited in amount; and (ii) certain fixed project costs allocable to the City, including debt service on WFA bonds. The current cost of WFA water is approximately $856 per acre foot. In Fiscal Year 2024, the City projects that payments to WFA under the WFA JPA Agreement will be approximately $9.8 million, including approximately $8.8 million in fixed costs attributable to the SWP and WFA. The obligation of the City to make payments under the WFA JPA Agreement is payable as a Maintenance and Operation Cost of the Water System.

WFA operates the WFA Treatment Plant, which is located in the City of Upland, for the benefit of the City and the other WFA members. Untreated SWP water is treated and disinfected at the WFA Treatment Plant prior to delivery to WFA members. The WFA Treatment Plant commenced operations in 1988 and has a total capacity of up to 81 mgd, with the City holding rights to 25.4 mgd of this capacity. The City also holds an ownership interest in 31.4% of the WFA Treatment Plant’s operating capacity.

WFA obtains untreated water from IEUA, which is a member agency of The Metropolitan Water District of Southern California (“MWD”), which in turn is an SWP contractor. SWP water originates in northern California. All water purchased by WFA is treated at the WFA Treatment Plant prior to delivery to the City and WFA’s other members.
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The State of California Department of Water Resources (“DWR”), which operates the SWP, as well as WFA, IEUA and MWD, face various challenges in the continued supply of water for WFA, including a prolonged drought in northern California that is affecting water supplies. A description of these challenges as well as a variety of other operating information with respect to DWR, IEUA and MWD is included in certain disclosure documents prepared by such entities. DWR, IEUA and MWD have certain publicly available documents and have entered into certain continuing disclosure agreements pursuant to which they are contractually obligated for the benefit of owners of certain of their outstanding obligations to file annual reports, notices of certain events as defined under Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time (“Rule 15c2-12”), and annual audited financial statements (collectively, the “SWP Information”) with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System (“EMMA”), which is accessible on the Internet at https://emma.msrb.org/. None of the SWP Information is incorporated into this Official Statement by reference thereto, and the City make no representation as to the accuracy or completeness of such information. NONE OF DWR, WFA, IEUA OR MWD HAS ENTERED INTO ANY CONTRACTUAL COMMITMENT WITH THE CITY, THE TRUSTEE OR THE OWNERS OF THE 2024 BONDS TO PROVIDE SWP INFORMATION TO THE CITY OR THE OWNERS OF THE 2024 BONDS.

NONE OF DWR, WFA, IEUA OR MWD HAS REVIEWED THIS OFFICIAL STATEMENT OR

MADE REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR

COMPLETENESS OF THE INFORMATION CONTAINED OR INCORPORATED HEREIN, INCLUDING INFORMATION WITH REGARD TO THE SWP. NONE OF DWR, WFA, IEUA OR MWD IS

CONTRACTUALLY OBLIGATED, AND NONE HAS UNDERTAKEN, TO UPDATE SUCH INFORMATION FOR THE BENEFIT OF THE CITY OR THE OWNERS OF THE 2024 BONDS UNDER RULE 15c2-12.

Desalter Water. Approximately 29% (8,589 acre feet) of the Water System’s potable water supply in Fiscal Year 2023 was desalted groundwater that the City purchased from CDA.

The City is a member agency of CDA, a joint powers authority that manages the production, treatment and distribution of desalted water extracted from the Chino Basin. CDA was established in 2001 pursuant to a joint powers agreement among IEUA, the cities of Chino and Chino Hills, Jurupa Community Services District, the Santa Ana River Water Company and the City. In 2008, Western Municipal Water District was added as a member of CDA.

CDA purifies brackish groundwater that is pumped from the Chino Basin by removing total dissolved solids and nitrates. Groundwater is extracted from approximately two dozen CDA-owned wells in the Chino Basin. Treatment occurs at CDA’s Chino Desalter I and Chino Desalter II facilities. Chino Desalter I, which was originally constructed in 2000, consists of a reverse osmosis water treatment facility, including associated wells and distribution pipelines, with a design capacity of 14.2 mgd. Chino Desalter II, which was originally constructed in 2006, consists of reverse osmosis (6 mgd) and ion exchange treatment (4 mgd) facilities, including associated wells and distribution pipelines.

CDA completed the construction of the Chino Desalter II Phase 3 Expansion project in 2014, which was designed to increase groundwater pumping from the lower Chino Basin and provide additional water capacity of 10,600 acre feet per year (or approximately 9.5 mgd). The City was a participant in the Phase 3 Expansion project together with Jurupa Community Services District and Western Municipal Water District.

The project included new capital improvements to the Water System: a new pump station and a new pipeline to deliver additional water supplies to the City.

As project participants, the City, Jurupa Community Services District and Western Municipal Water District were responsible for funding the cost of the $156 million project, net of grants. Through June 30, 2021, the City’s total share of the cost of the project was $48 million, excluding the City’s internal costs and capitalized interest, less $27.5 million in grant funding, for a net expected cost of $20.5 million. The City’s 3200
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participation in the Chino Desalter II Phase 3 Expansion project has resulted in additional capacity rights of approximately 3,921 acre feet of water per year. Final cost reconciliation for the Chino Basin Desalter II Phase 3 Expansion Project has been completed, and the City does not expect to incur additional costs. In addition, all of the City’s costs have now been financed or provided through grants and the City does not expect to enter into additional debt to finance its obligations with respect to the project.

The City receives treated desalter water from CDA through dedicated transmission pipeline facilities pursuant to a Transportation Agreement, dated as of January 1, 2002, by and among CDA, Jurupa Community Services District, the City of Norco, the Santa Ana River Water Company and the City.

The delivery of desalter water to the City is governed by the terms of an Amended and Restated Water Purchase Agreement entered into in 2011 between the City and CDA (the “Water Purchase Agreement”).

Pursuant to the Water Purchase Agreement, CDA has agreed to provide the City, and the City has agreed to take or pay for, 8,533 acre feet of desalter water each Fiscal Year (including the additional capacity provided by the Chino Basin Desalter II Phase 3 Expansion project), which currently represents approximately 35% of the total desalter water allotment among CDA members. The City can also buy desalter water in excess of its annual allotment when available.

The Water Purchase Agreement, together with similar agreements entered into by the other CDA members, enables CDA to provide for the development, financing, construction, operation and maintenance of the Chino Desalter I and Chino Desalter II facilities. The Water Purchase Agreement is a “take-or-pay” contract, and, accordingly, payments are due to CDA whether or not water is furnished to the City and whether or not the Chino Desalter I and Chino Desalter II facilities are operable, operated or retired. Such payments are not subject to any reduction and are not conditioned upon performance by CDA or any other CDA member under any agreement.

Payments by the City under the Water Purchase Agreement are treated as Maintenance and Operation Costs of the Water System. The City’s obligation is several and the City is not liable under the Water Purchase Agreement for the obligations of any other CDA member.

CDA’s charges to the City under the Water Purchase Agreement are sufficient to cover the City’s share of the following costs of the Chino Desalter I and Chino Desalter II facilities:
(i) Fixed Project Costs, consisting of debt service on CDA bonds and reserves for repair and replacement (the City’s share of debt service on CDA bonds is currently approximately 6.7%, but such share could change if other CDA members prepay their share of debt service as permitted by their water purchase agreements);
(ii) Fixed O&M Costs, consisting of operation and maintenance costs that do not vary depending upon the amount of water delivered to CDA members; and
(iii) Variable O&M Costs, consisting of operation and maintenance costs that vary depending upon the amount of water delivered to CDA members.

CDA faces various challenges in the continued supply of desalter water to the City. A description of these challenges as well as a variety of other operating information with respect to CDA is included in certain disclosure documents prepared by CDA. CDA has certain publicly available documents and has entered into certain continuing disclosure agreements pursuant to which it is contractually obligated for the benefit of owners of certain of its outstanding obligations to file annual reports, notices of enumerated events as defined under Rule 15c2-12 and annual audited financial statements (the “CDA Information”) with EMMA. None of the CDA Information is incorporated into this Official Statement by reference thereto, and the City makes no representation as to the accuracy or completeness of such information. CDA HAS NOT ENTERED INTO

ANY CONTRACTUAL COMMITMENT WITH THE CITY, THE TRUSTEE OR THE OWNERS OF THE 3201
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2024 BONDS TO PROVIDE CDA INFORMATION TO THE CITY OR THE OWNERS OF THE 2024 BONDS.

CDA HAS NOT REVIEWED THIS OFFICIAL STATEMENT AND HAS NOT MADE

REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS

OF THE INFORMATION CONTAINED OR INCORPORATED HEREIN, INCLUDING INFORMATION WITH REGARD TO CDA. CDA IS NOT CONTRACTUALLY OBLIGATED, AND HAS NOT

UNDERTAKEN, TO UPDATE SUCH INFORMATION FOR THE BENEFIT OF THE CITY OR THE OWNERS OF THE 2024 BONDS UNDER RULE 15c2-12.

SAWCO. Less than 1% (412 acre feet) of the Water System’s potable water supply in Fiscal Year 2023 was obtained from SAWCO, a mutual water company in which the City owns 295 shares, which entitles the City to purchase up to 600 acre feet of water per year.

SAWCO is located in unincorporated San Bernardino County north of the City of Upland and holds groundwater rights in the Chino Basin, which is discussed in detail under the caption “—Groundwater,” among other water sources. SAWCO was formed in 1882 to provide a source of water to residents in the Ontario and Upland areas. Over time, SAWCO’s shareholders came to include local municipalities, golf courses and other private entities. Currently, SAWCO’s largest shareholders are the City of Upland, which holds approximately 70% of outstanding shares, Monte Vista Water District, which holds approximately 5% of outstanding shares, and the City. Individual domestic water customers constitute less than 10% of current shareholders. The City’s 295 shares constitute approximately 4% of outstanding SAWCO shares. SAWCO is governed by a 7-member board that is elected by shareholders each year.

SAWCO’s water system includes 9 reservoirs holding approximately 9.45 million gallons of water for both domestic and irrigation use, 3 active wells used to supply domestic water and 7 active wells used to supply irrigation water, 9 booster stations, 19 booster pumps and 46 miles of pipeline. Over the last ten years SAWCO supplied an average of 11,500 acre feet of water per year to its shareholders.

SAWCO water supplies include groundwater and surface water from five sources, including the San Antonio Creek, the San Antonio Tunnel, the Chino Basin, the Cucamonga groundwater basin and the Six Basins groundwater basin. SAWCO’s production rights from such sources total an average of approximately 29,221 acre feet of water per year (with rights to the San Antonio Creek and the San Antonio Tunnel constituting a percentage of available flow and therefore subject to annual variations depending on hydrological conditions each year). SAWCO’s annual production from such sources is at or near its full production rights. Annual production from the San Antonio Creek and San Antonio Tunnel in 2023 was approximately 10,096 acre feet and 3,078 acre feet, respectively.

The City expects to receive its full entitlement of 600 acre feet of SAWCO water in 2024 at a rate of $296.208 per acre foot. A portion of this entitlement is expected to be stored in the Chino Basin for credit to the City’s Chino Basin storage account. See the subcaption “—Groundwater” above.

Recycled Water. The City supplied approximately 8,758 acre feet of recycled water to customers in Fiscal Year 2023. The City’s source of recycled water is treated wastewater produced by IEUA at four regional tertiary wastewater treatment plants that are owned and operated by IEUA. Under a 1972 agreement, the City is entitled to purchase recycled water in an amount up to its pro rata share of sewage contributed to the regional wastewater treatment system. The 1972 agreement expired in January 2023 and the City extended the terms of the Agreement via Section 29. IEUA is currently operating the recycled water program via ordinance which does not include material changes in the City’s recycled water entitlement.

The City uses recycled water to recharge the Chino Basin and to sell directly to irrigation and industrial customers. Sales to retail customers are on a metered basis, reducing the amount of potable water 3202
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that the City is required to supply in order to meet overall demand. In Fiscal Year 2023, the City’s average cost to purchase recycled water for direct delivery to customers was $490 per acre foot.

Drought Declarations
State Orders. The water years 2020 through 2022 combined ranked as the three driest years in California’s statewide precipitation record. (A water year begins on October 1 and ends on the following September 30.) While severe drought conditions did not materially impact the City’s water supplies during such period, beginning in April 2021, the Governor issued a series of drought emergency proclamations affecting various counties throughout the State, culminating in an October 19, 2021 proclamation declaring a drought state of emergency to be in effect statewide and directing all local water suppliers to implement water shortage contingency plans at a level appropriate to local conditions. A water shortage was not triggered under the City’s water shortage contingency plan due to its sufficient supply-demand balance and demand reduction measures were not implemented.

On March 28, 2022, the Governor issued an executive order directing the State Water Resources Control Board (“SWRCB”) to consider adopting regulations by May 25, 2022, to require urban water suppliers with water shortage contingency plans to implement, at a minimum, shortage response actions for a shortage level of up to 20 percent (a “Level 2” shortage). On May 24, 2022, in response to the executive order, the SWRCB adopted a new emergency water conservation regulation. The new regulation temporarily banned irrigating turf with potable water at commercial, industrial, and institutional properties, such as grass in front of or next to large industrial or commercial buildings. The ban did not include watering turf used for recreation or other community purposes, water used at residences or water to maintain trees. The regulation also required all urban water suppliers to implement conservation actions under Level 2 of their water shortage contingency plans. Complying with state requirements, the City launched a targeted outreach campaign designed to notify customers of the new water use restrictions, encourage a 20% voluntary reduction in water use by all customers, and provide tips and resources for conserving water. However, under supply and demand projections, the City had sufficient supplies to serve customers without triggering a Stage I Water Shortage under the City’s water shortage contingency plan.

On May 24, 2023, Governor Newsom issued an executive order easing water restrictions that were no longer necessary following a series of storms that ended the drought. The initial SWP allocation for 2023 was 5%, and increased to 30% in February 2023 and again to 75% in March 2023, with a final allocation of 100% announced in April 2023 as a result of improved water supply conditions. As of April 2024, the SWP allocation for 2024 is 30% and expected to increase based on total precipitation and snowfall.

In 2018, Senate Bill 606 and Assembly Bill 1668 were signed into law and established a new framework for long-term improvements in urban water use efficiency and drought planning as California adapts to climate change impacts. Senate Bill 606 and Assembly Bill 1668 require that long-term urban water use efficiency standards be set so that urban retail water suppliers’ urban water use objectives, together with other water uses excluded from the long-term standards, would exceed the statewide 2020 water conservation targets required pursuant to SB X7-7. Senate Bill 606 and Assembly Bill 1668 require the California Department of Water Resources, in coordination with the SWRCB, adopt long-term standards, appropriate variances, guidelines, and methodologies for calculating urban water use objectives by June 30, 2022. The urban water use objective is the sum of the aggregate estimates of:
• Efficient indoor residential water use
• Outdoor residential water use
• Outdoor irrigation of landscape areas with dedicated irrigation meters or equivalent technology in connection with commercial, industrial, and institutional (“CII”) water use • Water losses
• Approved variances
• Bonus incentive (i.e. potable water reuse)
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The SWRCB has held a series of workshops and public comment periods to obtain feedback on the proposed regulations. It is expected they will adopt the final rule in mid-2024. Under the proposed language, urban water suppliers, including the City, will be required to achieve their objective by January 1, 2027.

Water Shortage Contingency Plan. The City’s water shortage contingency plan, which is referred to as the Water Conservation Plan, calls for the City to respond to a water shortage in stages as follows:
• Voluntary Stage: All persons within the City are encouraged to voluntary do the following:
avoid hose washing of sidewalks, walkways and other paved surfaces, wash motor vehicles using a bucket or hose equipped with a positive shutoff nozzle, avoid using water to clean or fill decorative fountains or ponds unless such water is part of a recycling system, promptly repair all leaks from indoor and outdoor plumbing fixtures, avoid watering landscape areas between 6:00 a.m. and 6:00 p.m., avoid causing or allowing the water to run off landscape areas into adjoining streets or other paved areas • Stage 1 is intended to effect a reduction in water use of up to 10%. Under Stage 1, wasteful use of water (including using hoses without shutoff nozzles, irrigating landscaping between the hours of 9:00 a.m. and 4:00 p.m. and washing down paved areas) is prohibited. No water shall be used to clean, fill or maintain levels in decorative fountains, ponds, or lakes unless part of a recycling system. In addition, plumbing leaks must be repaired within 3 days of notification by the City. • Stage 2 is intended to effect a reduction in water use of up to 20%. Under Stage 2, the Stage 1 restrictions are in place, landscape irrigation is prohibited within 48 hours of rainfall, ornamental turf on public street medians must be irrigated with non-potable water, filling or refilling of empty swimming pools shall not occur without the written permission of the City Manager or his/her designee, and operators of lodging establishments must provide guests with the option not to have linens and towels laundered daily. • Stage 3 is intended to effect a reduction in water use of up to 30%. Under Stage 3, the Stage 1 and 2 restrictions are in place, landscape irrigation is limited to 4 days per week and the use of potable water for construction activities is prohibited.
• Stage 4 is intended to effect a reduction in water use of up to 40%. Under Stage 4, the Stage 1, 2 and 3 restrictions are in place, landscape irrigation is limited to 2 days per week and 15 minutes per day and vehicles may only be washed at commercial car washes. • Stage 5 is intended to effect a reduction in water use of up to 50%. Under Stage 5, the Stage 1, 2, 3 and 4 restrictions are in place and landscape irrigation is limited to 1 day per week. • Stage 6 is intended to effect a reduction in water use of over 50%. Under Stage 6, the Stage 1, 2, 3, 4 and 5 restrictions are in place, landscape irrigation is prohibited, commercial nurseries may only irrigate plants with a hand-held hose equipped with a positive shutoff nozzle, and filling of swimming pools, spas and fountains is prohibited.

The City is empowered to enforce its water shortage contingency plan with successively increasing fines and the installation of flow restriction devices.

The projected Water System operating results that are set forth under the caption “WATER SYSTEM FINANCIAL INFORMATION—Projected Operating Results and Debt Service Coverage” do not reflect the implementation of the Water Conservation Plan. The City does not currently expect that the implementation of the Water Conservation Plan in the future will have a material adverse effect on its ability to pay the 2024 Bonds from Net Revenues. As discussed under the caption “—Water System Rates and Charges,” the City’s rate structure consists of variable and fixed rate components. Decreased water consumption is partially offset by a decrease in related variable costs, while fixed water charges largely cover the Water System’s fixed operating and maintenance costs. In addition, the City has covenanted to set Water System rates and charges 3204
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in amounts that it expects to be sufficient to pay the 2024 Bonds from Net Revenues. See the caption “SECURITY FOR THE BONDS—Rate Covenant.”
If a water shortage should arise again in the future, legal issues exist as to whether different California Water Code provisions or State regulations will be invoked to manage the allocation of water. Any curtailment pursuant to State orders could necessitate an increase in the City’s water rates to Water System customers. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218” for a discussion of certain restrictions on the City’s ability to raise water rates.

Historical Water System Supply
The following table shows sources of supply for the Water System for the last five Fiscal Years.

Table 1
City of Ontario
Historical Water Supply
Fiscal Year
Ended
June 30 Groundwater
Imported
Water(1)
Desalter
Water
Recycled
Water(6) Total
Percentage
Increase/
(Decrease)(2)
afy(3) mgd afy(3) mgd afy(3) mgd afy(3) mgd afy(3) mgd
2019(4) 18,060 16.1 6,137 5.5 7,012 6.3 4,330 3.9 35,539 31.7 (6.17)% 2020(5) 18,564 16.6 5,358 4.8 6,174 5.5 4,490 4.0 34,585 30.9 (2.68) 2021 20,281 18.1 6,351 5.7 7,337 6.6 5,594 5.0 39,562 35.3 14.39 2022(7) 18,628 17.0 6,117 6.0 8,927 8.0 5,709 5.0 39,381 35.0 (0.51) 2023(4)(7) 16,386 15.0 4,468 4.0 8,589 8.0 5,503 5.0 34,945 31.0 (11.26)

(1) Includes purchases from SAWCO. See the caption “—Water Supply—SAWCO.” (2) Percentage shown is percentage of change in acre feet per year. (3) Acre feet per year.
(4) Decrease reflects wet hydrological year.
(5) Decrease reflects reductions in water use by commercial and industrial customers as a result of temporary business closings during the COVID-19 outbreak.
(6) Recycled water demand shown shows the recycled water metered values only. Farmers are not included in this total (7) CDA can produce up to 40,000 acre feet from the Chino Basin every year for the purpose of groundwater cleanup and control of contaminant migration. This production is fixed to achieve the desired groundwater cleanup goal. The member agencies have contract entitlements to receive a total of 35,200 acre feet per year of treated water from CDA. The City’s current contract entitlement is 8,533 acre feet per year; however, this may increase in years where the amount of water produced is greater than the projected amount of 40,000 acre feet.

Source: City.
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Historical Water System Deliveries
The following table shows potable and recycled water deliveries to Water System customers for the last five Fiscal Years.

Table 2
City of Ontario
Historical Water System Deliveries in Acre Feet(1)
Fiscal Year
Ended
June 30 Residential Commercial
Industrial/
Government/
Other Recycled Total
Percentage
Increase/
(Decrease)
2019(2) 16,960 5,764 7,919 3,884 34,527 (4.19)%
2020(3) 17,332 5,421 7,147 4,150 34,050 (1.38)
2021 19,012 4,113 9,372 5,434 37,931 11.40
2022 18,742 5,081 8,934 5,168 37,924 (0.02)
2023(2) 16,646 4,701 7,287 4,961 33,595 (11.42)

(1) Differences between water deliveries and water supplies set forth under the caption “—Historical Water System Supply” reflect changes in storage levels and unaccounted for water, including water losses and inaccuracies in water meter readings. (2) Decrease reflects wet hydrological year.
(3) Decrease reflects reductions in water use by commercial and industrial customers as a result of temporary business closings during the COVID-19 outbreak.

Source: City.

Historical water deliveries reflect connections to the Water System as well as water demand, which can be affected by weather conditions, State mandates and other factors.

Historical Water System Connections
The following table shows the number of connections to the Water System for the last five Fiscal Years.

Table 3
City of Ontario
Historical Water System Connections
Connection Type
Fiscal Year
2019
Fiscal Year
2020
Fiscal Year
2021
Fiscal Year
2022
Fiscal Year
2023
Residential 31,259 32,014 32,813 33,654 34,145
Commercial 3,028 2,967 2,982 3,107 3,085
Industrial(1) 330 322 312 315 318
Government(1) 294 289 362 365 369
Irrigation(1)(2) 1,716 1,625 1,604 1,782 1,808
TOTAL 36,627 37,217 38,073 39,223 39,275
Percentage Increase/(Decrease) 2.79% 1.61% 2.30% 3.02 0.13%

(1) Irrigation customers include some recycled water customers. In addition, small numbers of industrial and government customers purchase recycled water from the Water System. (2) Increase in irrigation connections in Fiscal Year 2022 and 2023 are due to growth in irrigation customers, particularly in the Ontario Ranch area of the City, that includes hydrants, recycled hydrants, and recycled irrigation.

Source: City.
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Historical Water System Sales Revenues
The following table shows the sales revenues of the Water System for the last five Fiscal Years.

Connection fees are not included in the below numbers.

Table 4
City of Ontario
Historical Water System Sales Revenues
Fiscal Year
Ended
June 30 Residential Commercial
Industrial/
Government/
Other Recycled(3) Total
Percentage
Increase/
(Decrease)
2019(1) $30,415,545 $22,919,423 $4,921,753 -- $58,256,721 (2.84)% 2020(2) 30,486,577 19,271,343 4,507,990 $267,259 54,533,169 (6.39) 2021 34,165,341 19,269,560 5,783,244 3,876,297 63,094,442 15.70 2022 42,051,304 16,521,372 6,214,511 7,585,241 72,372,428 14.70 2023 43,948,059 17,113,001 6,134,889 2,990,970 70,186,919 (3.02)

(1) Decrease reflects wet hydrological year.
(2) Decrease reflects reductions in water use by commercial and industrial customers as a result of temporary business closings during the COVID-19 outbreak as well as implementation of new billing system in June 2020 that the City estimates understated Fiscal Year 2020 revenues and overstated Fiscal Year 2021 revenues by approximately $1 million - $1.5 million due to a lack of accrual data. The City believes that such problems will not recur in future years as staff gains proficiency in the new billing system. (3) Prior to Fiscal Year 2020, recycled water revenues were included in the Commercial revenue column.

Source: City.

Water System sales revenues reflect water deliveries as well as adopted rates and charges. See the captions “—Historical Water System Deliveries” and “—Water System Rates and Charges.” 3207
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Largest Water System Customers
The following table shows the largest Water System customers for the Fiscal Year ended June 30, 2023, as determined by annual payments. The below table reflects information for both potable and recycled water customers of the Water System.

Table 5
City of Ontario
Ten Largest Water System Customers
Customer Customer Type Annual Payment(1)
Percentage of Total Water
System Sales Revenues(1)
City Of Ontario Government $ 1,629,320 2.32%
New Indy Ontario Industrial 1,511,207 2.15%
Ontario Montclair School District Government 628,028 0.89% Ontario International Airport Commercial 557,070 0.79%
California Commerce Commercial 445,696 0.64%
Chaffey Joint Unified Government 413,197 0.59%
WRPV XIV Ontario TA LLC Multi-Family 368,172 0.52%
Coca Cola Industrial 331,619 0.47%
The Ontario Owners Association Irrigation 304,701 0.43% Boberg Engineering Construction 292,005.42 0.42%
Total $ 6,481,016 9.23%

(1) Totals may not add due to rounding.

Source: City.

These customers accounted for approximately 9.23% of total Water System sales revenues and service charges of $70,186,919 in Fiscal Year 2023.

Water System Rates and Charges
General. The Water System’s rates and charges are set by the City Council and are not subject to the jurisdiction of, or regulation by, the California Public Utilities Commission or any other regulatory body. The City is, however, required to comply with the notice, hearing and majority protest provisions of Article XIIID of the State Constitution, which is popularly known as Proposition 218, as to Water System rates and charges.

See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES— Proposition 218” for further information with respect to Proposition 218.

The City annually determines the adequacy of the charge structure for water service in the service area after full consideration of expected operations, maintenance, capital costs and capital repayment obligations of the Water System. The City Council sets water rates and charges at a level that it determines is sufficient to pay all Maintenance and Operation Costs of the Water System, to make debt service payments and to maintain appropriate reserves for the Water System.

In July 2023, the City Council adopted rates commencing July 19, 2023 (the “Rate Plan”) in accordance with the provisions of Proposition 218. The adopted Rate Plan includes a rate increase of approximately 6% effective July 1, 2024. There is no assurance that the City Council will not repeal or modify the rates that are set forth in the Rate Plan in the future or that the City’s ratepayers will not approve an initiative to repeal or modify any increase in water rates and charges approved by the City Council. The City has covenanted to set rates and charges at levels that are sufficient to pay Maintenance and Operation Costs and debt service on the 2024 Bonds and any future Parity Bonds. See the caption “SECURITY FOR THE BONDS—Rate Covenant.”
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The projected operating results which are set forth under the caption “WATER SYSTEM FINANCIAL INFORMATION—Projected Operating Results and Debt Service Coverage” assume Water System rate increases of between 3% and 5% per annum beginning in Fiscal Year 2025 which have not yet been adopted by the City Council. There can be no assurance that Water System rates will be increased as projected herein. In the event that the City Council does not adopt such rate increases as currently contemplated, Water System operating results could be materially different from the projections in this Official Statement.

Adopted Rates and Charges. The City’s water rates and charges include: (1) a commodity rate; (2) a fixed monthly charge; and (3) fire service rates.
(1) Commodity Rates. The City imposes commodity rates for residential customers on a tiered basis per hundred cubic feet of water (“HCF”) used in each billing cycle. Tier 1 (0-10 HCF per billing cycle for single family residential customers) generally reflects efficient indoor and outdoor use, while Tier 2 (11-18 HCF or more per billing cycle for single family residential customers) reflects average use and Tier 3 (18+ HCF per billing cycle for single family residential customers) reflects inefficient use. Current commodity rates are set forth below.

Table 6
City of Ontario
Water Commodity Rates per HCF
Water Use Type Effective July 19, 2023 Effective July 1, 2024 Tier 1 $2.28 $2.40
Tier 2 3.63 3.82
Tier 3 4.38 4.59
Recycled 2.92 3.07

Source: City.
(2) Fixed Monthly Charge. The City imposes the following fixed monthly water service charges based on water meter size:

Table 7
City of Ontario
Fixed Monthly Water Service Charges
Effective July 19, 2023 Effective July 1, 2024
Meter Size Potable Water Recycled Water Potable Water Recycled Water 5/8” $ 29.19 $13.65 $30.65 $14.88
3/4” 39.09 15.78 41.01 17.20
1” 58.89 20.04 61.84 21.85
1½” 108.40 30.70 113.82 33.46
2” 167.81 43.48 176.20 47.40
3” 355.94 83.97 373.73 91.53
4” 633.18 143.63 664.84 156.56
6” 1,296.58 286.40 1,361.40 312.18
8” 2,385.74 520.79 2,505.02 567.67
10” 3,771.94 92.11 3,960.54 892.83

Source: City.
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(3) Fire Service Rates. In addition to the above rates and charges, the City imposes the following fixed monthly charges for fire serve based on water meter size.

City of Ontario
Fixed Monthly Fire Service Charges
Meter Size Effective July 19, 2023 Effective July 1, 2024 2” $11.31 $11.87
4” 21.29 22.36
6” 43.97 46.17
8” 83.09 87.25
10” 141.94 149.03
12” 223.49 234.66
16” 465.65 488.93

Source: City.

Comparison to Nearby Service Providers. The table below sets forth a comparison of the City’s typical monthly water bill for a single family residential user to those of certain nearby water purveyors.

Information for agencies other than the City is as of calendar year 2023, while information for the City is as of the date of this Official Statement.

Service Provider Monthly Charge(1)
Fontana Water Company (City of Fontana) $98.90
Golden State Water Company (City of San Dimas; City of Claremont) 94.45 Monte Vista Water District (budget based) 81.55
City of Ontario 81.03
City of Chino Hills (zone average) 79.30
Jurupa Community Services District 75.83
City of Upland 71.70
City of Chino 68.23
City of Pomona 67.71
City of Corona 61.08
Cucamonga Valley Water District 55.39

(1) Based on 18 units of water use and 5/8” meter size.

Source: City.

No Connection Fees. The City does not charge a connection fee to customers for connecting to the Water System. New developments are assessed a development impact fee, the proceeds of which must be spent on capital improvements and do not constitute Gross Revenues pledged to repay the 2024 Bonds.

Water System Collection Procedures
The City is on a monthly billing cycle for City-furnished utilities, including water, solid waste, stormwater and wastewater. A consolidated bill for these charges is sent to customers every month for services rendered in the prior month. Pursuant to City ordinance, all accounts that remain unpaid 26 days after the billing date are be deemed to be past due and late charges and penalties will be applied. Past due accounts will incur a late charge equal to 10% of the amount due, which is required to be within 10 business days. In addition to the late charge, a penalty of 1.5% per month is charged on account balances that are more than 30 past due. If payment is not received by the 60th day following the bill date, service is shut off. The City will not discontinue residential service for nonpayment where a customer has requested a payment plan, provides 3210
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all required documentation and has meets certain other conditions in the City’s shutoff policy. Accounts that have service discontinued are not reconnected without full payment of the bill and penalties and a reinstatement fee.

As of May 1, 2024, approximately 11% of outstanding accounts receivable were more than 60 days delinquent, including active customers who have entered into payment arrangements. Such delinquencies are in the total amount of approximately $547,605.

Future Water System Improvements
The City projects total capital improvements to the Water System of approximately $155,000,000 during Fiscal Years 2024 through 2028, including planning and design costs, water rights and supply costs, well and facility improvements, treatment, distribution system and transmission improvements, reservoir improvements and recycled water system improvements, excluding the 2024 Project described under the caption “THE 2024 PROJECT.” Such capital improvements are expected to be financed by a combination of grants (the City is currently pursuing Clean Water State Revolving Funds), Water System reserves and Net Revenues remaining after the payment of the Series 2024 Installment Payments and debt service on Parity Bonds, as well as a possible future bond issuance. The timing and proposed principal amount of such possible future bond issuance have not yet been determined and will depend upon the amount of grant funding received and the planning and design timeline for the applicable projects. Accordingly, the projected Water System operating results that are set forth under the caption “WATER SYSTEM FINANCIAL INFORMATION— Projected Operating Results and Debt Service Coverage” do not reflect an additional bond issuance other than the 2024 Bonds.

Projected Water System Supply
The following table shows the sources of supply for the Water System projected by the City for the current and next four Fiscal Years.

City of Ontario
Projected Water Supply in Acre Feet
Fiscal Year
Ending
June 30 Groundwater Imported Water Desalter Water Recycled Water(2) Total Percentage
Increase/
(Decrease)(1)
afy mgd afy mgd afy mgd afy mgd afy mgd
2024 18,203 16.2 5,172 4.6 8,533 7.6 5,894 3,134 8.1 40,936 36.5 17.14% 2025 19,472 17.4 5,877 5.2 8,533 7.6 6,285 3,014 8.3 43,181 38.5 5.48 2026 20,742 18.5 6,581 5.9 8,533 7.6 6,676 2,893 8.5 45,425 40.5 5.20 2027 22,011 19.6 7,286 6.5 8,533 7.6 7,067 2,773 8.8 47670 42.5 4.94 2028 23,280 20.8 7,990 7.1 8,533 7.6 7,458 2,652 9.0 49,913 44.5 4.71

(1) Percentage shown is percentage of change in acre feet per year. (2) Recycled water projections are split between the recycled water meter values (first column) and the farmer projections (second column).

The “mgd” column is the total between the two previous columns.

Source: City.
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Projected Water System Deliveries
The following table shows Water System deliveries projected by the City for the current and next four Fiscal Years.

City of Ontario
Projected Water System Deliveries in Acre Feet
Fiscal Year
Ending
June 30 Residential Commercial
Industrial/
Government/
Other Recycled Total
Percentage
Increase/
(Decrease)
2024(1) 19,372 5,721 6,504 5,393 36,989 10.10%
2025 22,097 6,740 5,721 5,824 40,382 9.17
2026 22,608 6,896 5,853 5,959 41,315 2.31
2027 23,118 7,052 5,985 6,093 42,248 2.26
2028 23,629 7,207 6,118 6,228 43,182 2.21

(1) Based on unaudited estimated results.

Source: City.

Water System deliveries can be affected by a number of factors, including connections to the Water System, State mandates and weather conditions. See the caption “—Projected Water System Connections” below.

Projected Water System Connections
The following table shows the number of retail connections to the Water System projected by the City for the current and next four Fiscal Years.

City of Ontario
Projected Water System Connections
Connection Type
Fiscal Year
2024(1)
Fiscal Year
2025
Fiscal Year
2026
Fiscal Year
2027
Fiscal Year
2028
Residential 34,828 35,524 36,235 36,960 37,699
Commercial 3,147 3,210 3,274 3,339 3,406
Industrial(2) 319 319 320 321 321
Government(2) 127 128 129 130 131
Irrigation(2) 2,113 2,176 2,241 2,308 2,378
TOTAL 40,534 41,357 42,199 43,058 43,935
Percentage Increase/(Decrease) 2.03% 2.03% 2.04% 2.04% 2.04%

(1) Based on unaudited estimated results.
(2) Irrigation customers include some recycled water customers. In addition, small numbers of industrial and government customers purchase recycled water from the Water System.

Source: City.

Projected increases in connections reflect expectations of development within the Water System service area.
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Projected Water System Sales Revenues
The following table shows the sales revenues of the Water System projected by the City for the current and next four Fiscal Years. The projections: (i) are based on the increases in projected water deliveries that are described under the caption “—Projected Water System Deliveries;” and (ii) assume Water System rate increases of between 3% and 5% per annum beginning in Fiscal Year 2025 which have not yet been adopted by the City Council. All rate increases are subject to the notice, hearing and protest provisions of Proposition 218, and there can be no assurance that rate increases which are projected in calendar years 2025 through 2028 will be approved. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218.”
City of Ontario
Projected Water System Sales Revenues
Fiscal Year
Ending
June 30 Residential Commercial
Industrial/
Government/
Other Recycled Total
Percentage
Increase/
(Decrease)
2024(1) $46,145,462 $17,968,651 $6,441,633 $3,140,519 $73,696,265 5.00% 2025 47,529,826 18,507,711 6,634,882 3,234,734 75,907,153 3.00 2026 48,955,721 19,062,942 6,833,929 3,331,776 78,184,368 3.00 2027 50,424,392 19,634,830 7,038,947 3,431,729 80,529,898 3.00 2028 51,937,124 20,223,875 7,250,115 3,534,681 82,945,795 3.00

(1) Based on unaudited estimated results.

Source: City.

WATER SYSTEM FINANCIAL INFORMATION
Available Cash
As of June 30, 2023, the Water System had approximately $70.3 million in available cash and investments (including $50.3 million in moneys that are restricted for capital expenditures).

Historical Operating Results and Debt Service Coverage
The following table is a summary of operating results of the Water System for the last five Fiscal Years. These results have been derived from the audited financial statements of the City, but exclude certain receipts which are not included as Revenues under the Indenture and certain non-cash items and include certain other adjustments.
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Table 8
City of Ontario
Historical Water System Operating Results and Debt Service Coverage Fiscal Year Ended June 30
2019 2020 2021 2022 2023
Gross Revenues
Sales and Service Charges(1) $ 58,256,721 $ 54,533,169 $ 63,094,442 $ 72,372,428 $ 70,186,919 Interest 4,683,847 5,019,590 5,410,558 155,877 6,060,565 Miscellaneous(2) 1,631,382 1,294,640 574,837 1,971,499 890,636 Total Gross Revenues $ 64,571,950 $ 60,847,399 $ 69,079,837 $ 74,499,804 $ 77,138,120 Maintenance and Operation Costs
Source of Supply(3) $ 22,325,544 $ 25,880,993 $ 21,687,947 $ 19,273,526 $ 23,446,819 Pumping Expenses 4,792,894 4,519,420 5,653,244 4,822,164 6,739,672 Transmission and Collection 6,668,363 3,778,590 11,081,593 7,743,829 8,028,426 Operations Management 1,882,362 3,976,019 7,454,788 8,274,502 7,512,114 General and Administration(4) 7,641,716 4,908,698 1,008,205 -- -- Billing and Collection Expense 1,391,772 1,765,374 848,570 1,158,156 2,561,530 Communications/Radio Replacement Reserve 20,000 -- -- -- -- Total Maintenance and Operation Costs $ 44,722,650 $ 44,829,094 $ 47,734,347 $ 41,272,177 $ 48,288,561 Net Revenues $ 19,849,300 $ 16,018,305 $ 21,345,490 $ 33,227,627 $ 28,849,559 Debt Service
2013 Installment Purchase Agreement(5) $ 4,755,776 $ 4,754,058 $ 4,698,877 $ 4,597,005 -- 2021 Bonds(5) -- -- -- -- $ 4,076,914
Total Parity Obligations $ 4,755,776 $ 4,754,058 $ 4,698,877 $ 4,597,005 $ 4,076,914 Capital Expenditures $ 4,836,957 $ 4,679,122 $ 4,282,856 $ 12,368,212 $ 23,979,530 Remaining Net Revenues $ 10,256,567 $ 6,585,125 $ 12,363,75 $ 16,262,410 $ 793,115 Debt Service Coverage 4.17 3.37 4.54 7.23 7.08

(1) Includes revenues from meter charges, water sales, meter installation fees and City charges. Decrease in Fiscal Year 2020 reflects reductions in water use by commercial and industrial customers as a result of temporary business closings during the COVID-19 outbreak, as well as implementation of new billing system in June 2020 that the City estimates understated Fiscal Year 2020 revenues and overstated Fiscal Year 2021 revenues by approximately $1 million - $1.5 million due to a lack of accrual data. The City believes that such problems will not recur in future years as staff gains proficiency in the new billing system. Increase in Fiscal Year 2022 due to 5.00% rate increase. (2) Includes reimbursement agreements.
(3) Includes payments to WFA, CDA, IEUA and the Watermaster. See the caption “THE WATER SYSTEM—Water Supply.” (4) Decrease in General and Administration costs beginning in Fiscal Year 2020 reflects changes in cost allocations among various City enterprises to more closely reflect actual costs attributable to each enterprise. As a result of such changes, certain costs that were previously allocated to the Water System have been allocated to other City enterprises. Beginning in Fiscal Year 2021, the employees responsible for billing and collections of water rates and charges were no longer charged to the City’s general fund and, therefore, such costs were allocated to Billing and Collection Expense beginning in Fiscal Year 2021. (5) The 2021 Bonds refunded the City’s obligations under the 2013 Installment Purchase Agreement.

Source: City.
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Projected Operating Results and Debt Service Coverage
Estimated projected operating results for the Water System for the current and next four Fiscal Years are set forth below. The financial forecast represents the City’s estimate of projected financial results based on a variety of assumptions, including those set forth in the footnotes to the chart set forth below. All of such assumptions are material in the development of the City’s financial projections, and variations in the assumptions may produce substantially different financial results. Actual operating results achieved during the projection period may vary from those presented in the forecast and such variations may be material.

City of Ontario
Projected Water System Operating Results and Debt Service Coverage Fiscal Year Ending June 30
2024(1) 2025 2026 2027 2028
Gross Revenues
Sales and Service Charges(3) $ 73,696,265 $ 75,907,153 $ 78,184,368 $ 80,529,898 $ 82,945,795 Interest(7) 6,242,382 6,429,653 6,622,543 6,821,219 7,025,856 Miscellaneous(3) 917,355 944,876 973,222 1,002,419 1,032,491 Transfer (to)/from Rate Stabilization Fund(4) -- -- -- -- -- Total Gross Revenues $ 80,856,002 $ 83,281,682 $ 85,780,133 $ 88,353,536 $ 91,004,142 Maintenance and Operation Costs
Source of Supply(5) $ 24,619,160 $ 25,357,735 $ 26,118,467 $ 26,902,020 $ 27,709,082 Pumping Expenses(6) 7,076,656 7,288,955 7,507,624 7,732,853 7,964,838 Transmission and Collection(7) 8,429,847 8,682,743 8,934,225 9,211,522 9,487,867 Operations Management(7) 7,887,720 8,124,351 8,368,082 8,619,124 8,877,698 Billing and Collection Expense(7) 2,689,606 2,770,295 2,853,403 2,939,006 3,027,176 Total Maintenance and Operation Costs $ 50,702,989 $ 52,224,079 $ 53,790,801 $ 55,404,525 $ 57,066,661 Net Revenues $ 30,153,013 $ 31,057,603 $ 31,989,332 $ 32,949,011 $ 33,937,481 Debt Service
2021 Bonds $ 4,075,832 $ 4,069,994 $ 4,070,544 $ 4,074,629 $ 4,068,411 2024 Installment Payments(8) -- 1,119,149 3,228,500 3,224,875 3,228,750 Total Parity Obligations $ 4,075,832 $ 5,189,143 $ 7,299,044 $ 7,299,504 $ 7,297,161 Remaining Net Revenues $ 26,077,181 $ 25,868,460 $ 24,690,288 $ 25,649,507 $ 26,640,321 Debt Service Coverage 7.40 5.99 4.38 4.51 4.65

(1) Reflects unaudited estimated results.
(2) Includes projected revenues from meter charges, water sales, meter installation fees and City charges. Assumes projected rate increases of 3% per annum beginning in Fiscal Year 2025 which has not yet been adopted by the City Council. All rate increases are subject to the notice, hearing and protest provisions of Proposition 218, and there can be no assurance that rate increases which are projected in calendar years 2025 through 2028 will be approved. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218.”
(3) Includes reimbursement agreements.
(4) [The City does not currently project any deposits to or withdrawals form the Rate Stabilization Fund.] See the caption “SECURITY FOR THE BONDS—Rate Stabilization Fund.”
(5) Includes projected payments to WFA, CDA, IEUA and the Watermaster. See the captions “THE WATER SYSTEM—Water Supply” and “THE WATER SYSTEM—Projected Water System Supply.”
(6) Reflects projected costs of groundwater extractions from City-owned wells. See the caption “THE WATER SYSTEM—Projected Water System Supply.” (7) Projected to increase by approximately 3% per annum. (8) Projected Series 2024 Installment Payments. Preliminary, subject to change.

Source: City.
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Employee Benefits
Pension Obligations. Accounting and financial reporting by state and local government employers for defined benefit pension plans is governed by GASB Statement No. 68 (“GASB 68”). GASB 68 includes the following components: (i) unfunded pension liabilities are included on the employer’s balance sheet; (ii) pension expense incorporates rapid recognition of actuarial experience and investment returns and is not based on the employer’s actual contribution amounts; (iii) lower actuarial discount rates are required to be used for underfunded plans in certain cases for purposes of the financial statements; (iv) closed amortization periods for unfunded liabilities are required to be used for certain purposes of the financial statements; and (v) the difference between expected and actual investment returns will be recognized over a closed five-year smoothing period. GASB 68 affects the City’s accounting and reporting requirements, but it does not change the City’s pension plan funding obligations.

The City participates in a Miscellaneous Plan to fund pension benefits for employees that serve the Water System. The City’s pension plan is administered by CalPERS. CalPERS administers agent multipleemployer public employee defined benefit pension plans for all of the City’s full-time and certain part-time employees. CalPERS provides retirement, disability and death benefits to plan members and beneficiaries and acts as a common investment and administrative agent for participating public entities within the State, including the City. CalPERS plan benefit provisions and all other requirements are established by State statute and the City Council.

City employees are subject to different benefit levels based on their hire date. The Miscellaneous Plan’s provisions and benefits in effect at June 30, 2023 are summarized as follows.

City of Ontario
CalPERS Miscellaneous Plan – Summary of Benefit Provisions Employees Hired on or before
December 31, 2012
Employees Hired after December 31,
2012 (Not Previously CalPERS
members)
Benefit Formula 2.5% @ age 55 2.0% @ age 62
Benefit Vesting 5 years of service 5 years of service
Benefit Payments Monthly for life Monthly for life
Minimum Retirement Age 50 52
Monthly Benefits as % of
Eligible Compensation
2% - 2.5% 1% - 2.5%
Employee Normal Cost 8.00%(1) 6.25%(1)
Employer Normal Cost
Rate

9.87% 9.87%

(1) Employees are required to make the full employee contribution themselves. The City does not make any portion of the employee contribution.

Source: City.

Contributions to the City’s pension plan consist of contributions from plan participants (i.e., employees) and contributions by the City.

City employees who were hired after December 31, 2012 and who were not previously CalPERS members receive benefits based on 2.0% at age 62 formula. Such employees are required to make the full amount of required employee contributions themselves under the California Public Employees’ Pension Reform Act of 2013 (“AB 340”), which was signed by the State Governor on September 12, 2012. AB 340 established a new pension tier for such employees. Benefits for such participants are calculated on the highest average annual compensation over a consecutive 36-month period. Employees are required to pay at least 50% 3216
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of the total normal cost rate. AB 340 also capped pensionable income as noted below. Amounts are set annually, subject to Consumer Price Index increases, and retroactive benefits increases are prohibited, as are contribution holidays and purchases of additional non-qualified service credit.

City of Ontario
Pensionable Income Caps for Calendar Year 2024 (AB 340 and Non-AB 340 Employees) Employees Hired On or Before
December 31, 2012
(Non-AB 340 Employees)
Employees Hired After
December 31, 2012
(AB 340 Employees)
Maximum Pensionable Income $345,000 $181,734
Maximum Pensionable Income if
also Participating in Social Security N/A $151,446

Source: City.

Additional employee contributions, limits on pensionable compensation and higher retirement ages for new members as a result of the passage of AB 340 are expected to reduce the City’s unfunded pension lability and potentially reduce City contribution levels in the long term.

The City is also required to contribute the actuarially determined remaining amounts necessary to fund benefits for its members. Employer contribution rates for all public employers are determined on an annual basis by the CalPERS actuary and are effective on the July 1 following notice of a change in the rate. Total plan contributions are determined through the CalPERS annual actuarial valuation process. The total minimum required employer contribution is the sum of: (i) the plan’s employer normal cost rate, which funds pension benefits for current employees for the upcoming Fiscal Year (expressed as a percentage of payroll); plus (ii) the employer unfunded accrued liability contribution amount, which funds pension benefits that were previously earned by current and former employees (billed monthly).

For Fiscal Year 2023, required employer normal cost rates as a percentage of payroll were 9.87% for Miscellaneous Plan employees. For Fiscal Year 2024, required employer normal cost rates as a percentage of payroll are 10.56% for Miscellaneous Plan employees.

Beginning in Fiscal Year 2018, CalPERS began collecting employer contributions toward a pension plan’s unfunded liability as dollar amounts instead of the prior method of a percentage of payroll. According to CalPERS, this change was intended to address potential funding issues that could arise from a declining payroll or a reduction in the number of active members in the plan. Funding the unfunded liability as a percentage of payroll could lead to underfunding of pension plans. Due to stakeholder feedback regarding internal needs for total contributions expressed as an estimated percentage of payroll, the CalPERS reports include such results in the contribution projection for informational purposes only. Contributions toward a pension plan’s unfunded liability will continue to be collected as set dollar amounts.

The City’s required contributions to CalPERS fluctuate each year and, as noted, include a normal cost component and a component equal to an amortized amount of the unfunded liability. Many assumptions are used to estimate the ultimate liability of pensions and the contributions that will be required to meet those obligations. The CalPERS Board of Administration has adjusted and may in the future further adjust certain assumptions used in the CalPERS actuarial valuations, which adjustments may increase the City’s required contributions to CalPERS in future years. Accordingly, the City cannot provide any assurances that the City’s required contributions to CalPERS in future years will not significantly increase (or otherwise vary) from any past or current projected levels of contributions. CalPERS earnings reports for Fiscal Years 2012-13 through 2022-23 report investment gains (and losses) of approximately 13.2%, 18.4%, 2.4%, 0.6%, 11.2%, 8.6%,

6.7%, 4.7%, 21.3%, (6.1%), and 6.1%, respectively. Future earnings performance may increase or decrease future contribution rates for plan participants, including the City 3217
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CalPERS’ discount rate was lowered from 7.00% to 6.80% in fall 2021. Lowering the discount rate means that employers that contract with CalPERS to administer their pension plans will see increases in their normal costs and unfunded actuarial liabilities. Active members hired after January 1, 2013 who were not previously CalPERS members will also see their contribution rates rise under AB 340.

The tables below are derived from the Miscellaneous Plan of the City of Ontario Annual Valuation Report as of June 30, 2022 (the “2023 Report”) and show the required and projected employer contributions (before cost sharing) for the next six fiscal years, as well as the historical funded status of the City’s Miscellaneous pension plan. Projected results reflect the adopted changes to the discount rate described in the 2023 Report. Such projections also assume that all actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. The projected normal cost percentages in the projections below does not reflect that the normal cost will decline over the time as new employees are hired into AB 340 or other lower cost benefit tiers.

The foregoing projections assumed the investment return for Fiscal Year 2023 would be 6.8%. As described above, CalPERS announced a investment returns of 6.1% for Fiscal Year 2023. As a result, the actual contribution requirements for Fiscal Year 2025 and the following years shown below can be expected to differ from such projections. No assurance can be provided that the City’s CalPERS plan expenses will not increase significantly in the future.

Required
Contribution
Projected Future Employer Contributions
(Assumes 6.80% Return for Fiscal Year 2022-23 and Beyond) Fiscal Year 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 Normal Cost % 10.44% 10.3% 10.1% 10.0% 9.8% 9.7%
UAL Payment $1,470,627 $2,546,000 $3,622,000 $4,698,000 $5,774,000 $5,774,000 Total as a % of Payroll* 12.88% 14.4% 15.8% 17.1% 18.4% 18.0% Projected Payroll $60,247,455 $61,934,384 $63,668,547 $65,451,266 $67,283,902 $69,167,851

* Illustrative only and based on the projected payroll shown.

Source: CalPERS’ 2023 Report.

The table below are derived from the 2023 Report and show the funded status of the City’s Miscellaneous pension plan as of the valuation dates shown.

Valuation
Date
Accrued
Liability
Market Value of
Assets
Unfunded
Liability Funded Ratio
Annual
Covered
Payroll
6/30/2018 $376,305,695 $277,662,560 $98,643,135 73.8% $50,409,095 6/30/2019 398,658,192 293,938,109 104,720,083 73.7 53,669,904 6/30/2020 421,061,940 408,307,863 12,754,077 97.0 56,051,895 6/30/2021 462,487,852 487,328,384 (24,840,532)(1) 105.4 49,276,257 6/30/2022 483,988,774 436,735,780 47,252,994 90.2 55,457,382

(1) On May 21, 2020 the City issued $236,585,000 of pension obligation bonds, the proceeds of which were used to pay the City’s total unfunded liability for all of the City’s Cal PERS plans (including the Miscellaneous plan) as of such date.

Source: CalPERS’ 2023 Report.

Portions of the above disclosures are primarily derived from information that has been produced by CalPERS, its independent accountants and its actuaries. The City has not independently verified such information and neither makes any representations nor expresses any opinion as to the accuracy of the information that has been provided by CalPERS.

The comprehensive annual financial reports of CalPERS are available on CalPERS’ Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports 3218
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and other information that concerns benefits and other matters. The textual reference to such Internet website is provided for convenience only. None of the information on such Internet website is incorporated by reference herein. The City cannot guarantee the accuracy of such information. Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or be changed in the future.

For Fiscal Year 2023, the total required employer payment of the unfunded accrued liability for the City’s Miscellaneous Plan was $5,595,658. For Fiscal Year 2024, the total required employer payment of the unfunded accrued liability for the City’s Miscellaneous Plan is $0.00. A summary of principal assumptions and methods used to determine the total pension liability for Fiscal Year 2023 is shown below.

City of Ontario
Actuarial Assumptions for CalPERS Miscellaneous Plan
Actuarial Cost Method Entry Age Normal in accordance with the requirements of GASB 68 Asset Valuation Method Market Value of Assets
Actuarial Assumptions:

Discount Rate 6.90%
Inflation 2.50%
Salary Increases Varies by entry age and service
Investment Rate of Return 6.90% net of pension plan investment and administrative expenses; includes projected inflation rate of 2.50%
Mortality Rate Table(1) Derived using CalPERS’ membership data for all funds

(1) The mortality table used was developed based on CalPERS-specific data from a 2017 actuarial experience study for the period from 1997-2015.

Source: City.

Changes in the net pension liability for the City’s pension plans in the most recent Fiscal Year for which information is available were as follows:

City of Ontario
Changes in CalPERS Miscellaneous Plan Net Pension Liability Increase / (Decrease)
Total
Pension Liability
Plan Fiduciary
Net Position
Net Pension
Liability / (Asset)
Balance at June 30, 2021 $ 430,362,634 $ 487,358,582 $(56,995,948) Balance at June 30, 2022 473,429,254 436,746,615 36,682,639 Net Changes for period from July 1, 2021
through June 30, 2022
$ 43,066,620 $ (50,611,967) $ 93,678,587

Source: City.

The table below presents the net pension liability of the City’s pension plans, calculated using the discount rate applicable to Fiscal Year 2023 (6.90%), as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.90%) or 1 percentage point higher (7.90%) than the Fiscal Year 2021 rate:
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City of Ontario
Sensitivity of CalPERS Miscellaneous Plan Net Pension Liability to Changes in the Discount Rate
Plan’s Net Pension Liability/(Asset)
Discount Rate – 1%
(5.90%)
Applicable Discount
Rate (6.90%)
Discount Rate + 1%
(7.90%)
Miscellaneous Plan $101,517,478 $36,682,639 $(16,561,733)

Source: City.

For additional information relating to the City’s pension plans, see Note 10 to the City’s audited financial statements set forth in Appendix A.

Other Post-Employment Benefits. The City provides post-employment health care benefits to qualified retired employees. Employees are eligible for such benefits in accordance with applicable MOUs with employee bargaining units. The City administers a single-employer defined benefit post-employment healthcare plan (the “OPEB Plan”). A menu of benefit provisions, as well as other requirements, are established by state statutes within the Public Employees’ Retirement Law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance.

At June 30, 2022, the following employees were covered by the benefit terms:

Category Count
Active employees 1,183
Inactive employees or beneficiaries currently receiving benefit payments 720 Inactive employees entitled to but not yet receiving benefit payment 222

Source: City.

The City funds benefits under the OPEB Plan based on an Actuarially Determined Contribution (the “ADC”). For the year ended June 30, 2023, the City’s ADC contribution rate was 10.37% of covered employee payroll. Employees do not contribute to the plan, but may pay the difference between the benefit that they receive and monthly premiums for that benefit.

GASB has issued two pronouncements, known as GASB 74 and GASB 75, related to funding and accounting for the OPEB Plan. Under these pronouncements, OPEB Plan benefits are intended to be accounted for in a manner that is similar to the accounting treatment of pensions under GASB 68. See the caption “—Retirement Contributions.” Under GASB 74 and 75, unfunded OPEB Plan benefits will be recognized on the City’s financial statements and the City is required to use the Entry Age actuarial cost method when calculating OPEB Plan liabilities. In addition, a 20-year municipal bond rate is used to discount unfunded OPEB Plan payments and the long-term rate of return on plan investments is used to discount benefits that are projected to be paid by plan assets.

The City retained a consultant (the “Actuarial Consultant”) to calculate the City’s post-employment benefits funding status. In a report dated June 30, 2021 (the “Report”), the Actuarial Consultant concluded that the City’s ADC is $5,010,000. According to the Actuarial Consultant, the City’s unfunded actuarial accrued liability for postemployment benefits was $0 as of June 30, 2020, the most recent date for such liability was calculated.

The City is not required to fund the amortization of the unfunded actuarial liability. Prior to Fiscal Year 2020, the City’s policy was to pay for OPEB Plan costs as they are incurred. In Fiscal Year 2020, the City Council approved the establishment of an irrevocable trust to fund OPEB Plan benefits (the “OPEB 3220
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Trust”) with the California Employers’ Retiree Benefit Trust, an agent multiple-employer plan that is administered by CalPERS, and approved and authorized an agreement with CalPERS to administer the OPEB Trust on its behalf. As of June 30, 2023, the City held $164,600,641 in the OPEB Trust. Based on the most recent actuarial valuation, the actuarial unfunded liability of the OPEB Plan was estimated to be approximately $ 19,111,624 using a methodology that is compliant with GASB 75.

Changes in the total liability for the City’s OPEB Benefit plan for Fiscal Year 2023 were as follows.

City of Ontario
Changes in OPEB Plan Liability
Increase / (Decrease)
Total
OPEB Plan Liability
Plan Fiduciary
Net Position
Net OPEB Plan
Liability / (Asset)
Balance at June 30, 2022 $162,461,878 $174,614,201 $ (12,152,353) Net Changes for period from
July 1, 2022 through June 30, 2023 5,726,939 (25,537,038) 31,263,977 Balance at June 30, 2023 $168,188,787 $149,077,163 $ 19,111,624

Source: City.

The following table presents the net liability of the OPEB Plan, calculated using the discount rate applicable to Fiscal Year 2023 (6.25%), as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.25%) or 1 percentage point higher (7.25%) than the current rate:

City of Ontario
Sensitivity of OPEB Plan Total Liability to Changes in the Discount Rate Discount Rate – 1%
(5.25%)
Current Discount Rate
(6.25%)
Discount Rate + 1%
(7.25%)
Plan’s Total Liability/(Asset) $43,208,254 $19,111,624 $(482,525)

Source: City.

Future changes in funding policies and assumptions, including those related to assumed rates of investment return and healthcare cost inflation, could trigger increases in the City’s annual required OPEB Plan contributions, and such increases could be material to the finances of the City. No assurance can be provided that such expenses will not increase significantly in the future. The City does not expect that any increased funding of OPEB Plan benefits will have a material adverse effect on the ability of the City to pay the 2024 Bonds.

For additional information relating to the City’s OPEB Plan, see Note 11 to the City’s audited financial statements set forth in Appendix A.

CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES Article XIIIB
Article XIIIB of the State Constitution limits the annual appropriations of the State and of any city, county, school district, authority, special district or other political subdivision of the State to the level of appropriations of the particular governmental entity for the prior fiscal year, as adjusted for changes in the cost 3221
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of living and population. The “base year” for establishing such appropriation limit is the 1978-79 State fiscal year and the limit is to be adjusted annually to reflect changes in population and consumer prices.

Adjustments in the appropriations limit of an entity may also be made if: (a) the financial responsibility for a service is transferred to another public entity or to a private entity; (b) the financial source for the provision of services is transferred from taxes to other revenues; or (c) the voters of the entity approve a change in the limit for a period of time not to exceed four years.

Appropriations that are subject to Article XIIIB generally include the proceeds of taxes levied by or for the State or other entity of local government, exclusive of certain State subventions, refunds of taxes and benefit payments from retirement, unemployment, insurance and disability insurance funds. “Proceeds of taxes” include, but are not limited to, all tax revenues and the proceeds to an entity of government from: (i) regulatory licenses, user charges, and user fees (but only to the extent that such proceeds exceed the cost reasonably borne by the entity in providing the service or regulation); and (ii) the investment of tax revenues.

Article XIIIB includes a requirement that if an entity’s revenues in any year exceed the amounts that are permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years.

Certain expenditures are excluded from the appropriations limit, including payments of indebtedness that were existing or legally authorized as of January 1, 1979, or of bonded indebtedness thereafter approved by the voters, and payments that are required to comply with court or federal mandates which without discretion require an expenditure for additional services or which unavoidably make the provision of existing services more costly.

The City is of the opinion that its charges for the Water System do not exceed the costs that it reasonably bears in providing such service and therefore are not subject to the limits of Article XIIIB. See the caption “SECURITY FOR THE BONDS—Rate Covenant” for a description of the City’s covenant to set rates and charges for the Water Service.

Proposition 218
General. An initiative measure entitled the “Right to Vote on Taxes Act” (the “Initiative”) was approved by the voters of the State at the November 5, 1996 general election. The Initiative added Articles XIIIC and XIIID to the State Constitution. According to the “Title and Summary” of the Initiative prepared by the State Attorney General, the Initiative limits “the authority of local governments to impose taxes and property-related assessments, fees and charges.”
Article XIIID. Article XIIID defines the terms “fee” and “charge” to mean “any levy other than an ad valorem tax, a special tax or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including user fees or charges for a property-related service.” A “property-related service” is defined as “a public service having a direct relationship to property ownership.” Article XIIID further provides that reliance by an agency on any parcel map (including an assessor’s parcel map) may be considered a significant factor in determining whether a fee or charge is imposed as an incident of property ownership.

Article XIIID requires that any agency which imposes or increases any property-related fee or charge must provide written notice thereof to the record owner of each identified parcel upon which such fee or charge is to be imposed and must conduct a public hearing with respect thereto. The proposed fee or charge may not be imposed or increased if a majority of owners of the identified parcels file written protests against it.

As a result, because fees for water service are a “fee” or “charge” as defined in Article XIIID, the local government’s ability to increase such fees or charges may be limited by a majority protest.

In addition, Article XIIID includes a number of limitations that are applicable to existing fees and charges, including provisions to the effect that: (a) revenues that are derived from the fee or charge may not 3222
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exceed the funds which are required to provide the property-related service; (b) such revenues may not be used for any purpose other than that for which the fee or charge was imposed; (c) the amount of a fee or charge that is imposed upon any parcel or person as an incident of property ownership may not exceed the proportional cost of the service attributable to the parcel; and (d) no such fee or charge may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question.

Property-related fees or charges based on potential or future use of a service are not permitted.

Based upon the California Court of Appeal decision in Howard Jarvis Taxpayers Association v. City of Los Angeles, 85 Cal. App. 4th 79 (2000), which was denied review by the State Supreme Court, it was generally believed that Article XIIID did not apply to charges for water and wastewater services that are “primarily based on the amount consumed” (i.e., metered water or wastewater rates), which had been held to be commodity charges related to consumption of the service, not property ownership. The State Supreme Court ruled in Bighorn-Desert View Water Agency v. Verjil, 39 Cal. 4th 205 (2006) (the “Bighorn Case”), however, that fees for ongoing water service through an existing connection were property-related fees and charges. The State Supreme Court specifically disapproved the holding in Howard Jarvis Taxpayers Association v. City of Los Angeles that metered water rates are not subject to Proposition 218. The City complies with the notice, hearing and protest procedures in Article XIIID, as further explained by the State Supreme Court in the Bighorn Case, with respect to water rate increases.

On April 20, 2015, the California Court of Appeal, Fourth District, issued an opinion in Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano, 235 Cal. App. 4th 1493 (2015) (the “SJC Case”) upholding tiered water rates under Proposition 218 provided that the tiers correspond to the actual cost of furnishing service at a given level of usage, including the capital costs of improvements to provide additional increments of water. The opinion included a finding that the City of San Juan Capistrano did not make any attempt to calculate the actual costs of providing water at various tier levels. The City’s current residential water rate structure includes tiered rates based on usage. The City has reviewed the SJC Case decision and does not expect the decision to affect its rate structure. The City believes that its current water rates comply with the requirements of Proposition 218 because they are tied to the cost of service and capital improvements, and expects that any future water rate increases will comply with Proposition 218’s procedural and substantive requirements to the extent applicable thereto.

Article XIIIC. Article XIIIC provides that the initiative power may not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge and that the power of initiative to affect local taxes, assessments, fees and charges is applicable to all local governments. Article XIIIC does not define the terms “local tax,” “assessment,” “fee” or “charge,” so it was unclear whether the definitions set forth in Article XIIID referred to above are applicable to Article XIIIC. Moreover, the provisions of Article XIIIC are not expressly limited to local taxes, assessments, fees and charges imposed after November 6, 1996. On July 24, 2006, the State Supreme Court held in the Bighorn Case that the provisions of Article XIIIC applied to rates and fees charged for domestic water use. In the decision, the State Supreme Court noted that the decision did not address whether an initiative to reduce fees and charges could override statutory rate setting obligations.

On August 3, 2020, the State Supreme Court issued an opinion in Wilde v. City of Dunsmuir (Cal. S.

Ct. S252915) holding that taxpayers do not have the right under Proposition 218 to challenge water rates by referendum, and the City does not believe that Article XIIIC grants to the voters within the City the power (whether by initiative under Article XIIIC or otherwise, or by referendum, which is not authorized under Article XIIIC) to repeal or reduce rates and charges for the Water Service in a manner that would interfere with the contractual obligations of the City or the obligation of the City to maintain and operate the Water System.

However, there can be no assurance as to the availability of particular remedies adequate to protect the Beneficial Owners of the Bonds. Remedies that are available to Beneficial Owners of the Bonds in the event of a default by the City are dependent upon judicial actions which are often subject to discretion and delay and could prove both expensive and time-consuming to obtain. So long as the Bonds are held in book-entry form, 3223
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DTC (or its nominee) will be the sole registered owner of the Bonds and the rights and remedies of the Bond Owners will be exercised through the procedures of DTC.

Proposition 26
On November 2, 2010, voters in the State approved Proposition 26. Proposition 26 amends Article XIIIC of the State Constitution to expand the definition of “tax” to include “any levy, charge, or exaction of any kind imposed by a local government” except the following: (a) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege; (b) a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (c) a charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof; (d) a charge imposed for entrance to or use of local government property, or the purchase, rental or lease of local government property; (e) a fine, penalty or other monetary charge imposed by the judicial branch of government or a local government as a result of a violation of law; (f) a charge imposed as a condition of property development; and (g) assessments and property-related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 applies to charges imposed or increased after November 2, 2010 and provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity. The City believes that its water rates and charges meet the exception that is described in clause (g) above and are not taxes under Proposition 26.

Future Initiatives
Articles XIIIB, XIIIC and XIIID and Proposition 26 were adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time other initiatives could be proposed and adopted affecting the City’s revenues or ability to increase revenues. See the caption “CERTAIN RISKS TO BONDHOLDERS—Initiative Measure Relating to Water Revenues” for information regarding an initiative measure expected to appear on the November 2024 Statewide ballot, which would amend Article XIIIC and apply retroactively to January 1, 2022. If such retroactivity is upheld, the amendments contained in Initiative 1935 would apply to the City’s most recent water rate increases, which were adopted on December 6, 2023 after a noticed public hearing in compliance with Article XIIIC. The City was aware of Initiative 1935 when it went through the process prescribed by Proposition 218 and believes that its current water rates were adopted in compliance with Article XIIIC, as it would be amended if Initiative 1935 is approved by the voters.

CERTAIN RISKS TO BONDHOLDERS
The following information, in addition to the other matters that are described in this Official Statement, should be considered by prospective investors in evaluating the Bonds. However, the following does not purport to be comprehensive, definitive or an exhaustive listing of risks and other considerations that may be relevant to making an investment decision with respect to the Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. If any risk factor materializes to a sufficient degree, it alone could delay or preclude payment of principal of or interest on the Bonds.
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Limited Obligations
The obligation of the City to pay the Series 2024 Installment Payments is a limited obligation of the City and is not secured by a legal or equitable pledge or charge or lien upon any property of the City or any of its income or receipts, except Net Revenues of the City’s Water System. The obligation of the City to pay the Series 2024 Installment Payments does not constitute an obligation of the City to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation.

Accuracy of Assumptions
To estimate the Net Revenues available to pay the Series 2024 Installment Payments, the City has made certain assumptions with regard to various matters, including but not limited to future development within the City and increases in revenues resulting therefrom, the rates and charges to be imposed in future years, the expenses associated with operating the Water System and the interest rate at which funds will be invested. The City believes these assumptions to be reasonable, but to the extent that any of such assumptions fail to materialize, the Net Revenues available to pay the Series 2024 Installment Payments will, in all likelihood, be less than those projected herein. The City may choose, however, to maintain compliance with the rate covenant that is set forth in the Indenture in part by means of contributions from the Rate Stabilization Fund or other available reserves or resources. In such event, Net Revenues may generate amounts which are less than 125% of Debt Service in any given Fiscal Year. See the captions “SECURITY FOR THE BONDS— Rate Covenant,” “—Rate Stabilization Fund” and “WATER SYSTEM FINANCIAL INFORMATION— Projected Water System Operating Results and Debt Service Coverage.” Water System Demand
There can be no assurance that the demand for water service will occur as described in this Official Statement. Reductions in levels of demand could require an increase in rates or charges in order to comply with the rate covenant. See the caption “SECURITY FOR THE BONDS—Rate Covenant.” Demand for water service could be reduced or may not occur as projected by the City as a result of reduced levels of development in the City’s service area, hydrological conditions, an economic downturn, voluntary conservation efforts or mandatory State conservation orders in response to drought conditions and other factors.

Water System Expenses
There can be no assurance that the City’s expenses will be consistent with the descriptions in this Official Statement. Maintenance and Operation Costs may vary with labor costs (including costs related to pension liabilities and the costs of retaining qualified personnel with the proper certifications to operate Water System facilities), treatment costs, energy costs, regulatory compliance costs, increased costs to access groundwater due to land subsidence or falling water tables, increased imported water purchase costs and other factors. Much of the City’s water supply is sold to the City by other agencies. Increases in such other agencies’ costs or changes in such other agencies’ operations over which the City has no control could impact the City’s cost of water to supply its customers. See the caption “THE WATER SYSTEM—Water Supply.” Increases in expenses could require an increase in rates or charges in order to comply with the rate covenant.

See the caption “SECURITY FOR THE BONDS—Rate Covenant.” Rate increases are subject to the provisions of Proposition 218 and there can be no assurance that the City will be able to increase rates as needed to address increases in Water System expenses. See the caption “—Rate-Setting Process under Proposition 218.”
Limited Recourse on Default
If the City defaults on its obligation to pay the Series 2024 Installment Payments, the Trustee, as assignee of the Authority, has the right to declare the total unpaid principal amount of the Series 2024 3225
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Installment Payments, together with the accrued interest thereon, to be immediately due and payable.

However, in the event of a default and such acceleration, there can be no assurance that the City will have sufficient funds to pay such accelerated amounts from Net Revenues.

Rate-Setting Process under Proposition 218
Proposition 218, which added Articles XIIIC and XIIID to the State Constitution, affects the City’s ability to maintain existing Water System rates and impose rate increases, and no assurance can be given that future proposals to increase Water System rates will not encounter majority protest opposition or be challenged by initiative action authorized under Proposition 218. In the event that future proposed Water System rate increases cannot be imposed as a result of majority protest or initiative, the City might thereafter be unable to generate Net Revenues in the amounts required by the Installment Purchase Agreement to pay the Series 2024 Installment Payments. The City believes that its current Water System rates approved by the City Council were effected in accordance with the public hearing and majority protest provisions of Proposition 218. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218.”
Statutory and Regulatory Compliance
Laws and regulations governing treatment and delivery of water are enacted and promulgated by federal, State and local government agencies. Compliance with these laws and regulations is and will continue to be costly, and, as more stringent standards are developed, such costs will likely increase.

Claims against the Water System for failure to comply with applicable laws and regulations could be significant. Such claims may be payable from assets of the Water System and constitute Maintenance and Operation Costs or from other legally available sources. In addition to claims by private parties, changes in the scope and standards for municipal water systems such as that operated by the City may also lead to administrative orders issued by federal or State regulators. Future compliance with such orders can also impose substantial additional costs on the City. No assurance can be given that the cost of compliance with such laws, regulations and orders would not adversely affect the ability of the City to generate Net Revenues in amounts that are sufficient to pay the Bonds.

Natural Disasters
The occurrence of any natural disaster in the City, including, without limitation, fire, earthquake, landslide, land subsidence, high winds, drought or flood, could have an adverse material impact on the economy within the City, the Water System and the revenues available for the payment of the Series 2024 Installment Payments. Portions of the Water System may be at risk of damage or destruction from unpredictable seismic activity. See the caption “THE CITY—Seismic Considerations.” The City is not required to maintain earthquake insurance under the Installment Purchase Agreement, and does not currently maintain such insurance. See the caption “THE CITY—City Insurance.” The occurrence of natural disasters in the City’s service area could result in substantial damage to the Water System which, in turn, could substantially reduce revenue generated by the Water System and affect the ability of the City to pay the Series 2024 Installment Payments. The City maintains liability insurance for the Water System and property casualty insurance for certain portions of the Water System. However, there can be no assurance that specific losses will be covered by insurance or, if covered, that claims will be paid in full by the applicable insurers.

Furthermore, as described under the caption “THE CITY—City Insurance,” significant portions of the Water System, including subsurface pipelines that are located more than 1,000 feet from City-owned aboveground infrastructure, are not covered by the City’s property casualty insurance except for a $750,000 sublimit 3226
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that is applicable to unscheduled assets. Damage to such portions of the Water System as a result of natural disasters would result in uninsured losses to the City.

Limitations on Remedies
The ability of the City to comply with its covenants under the Installment Purchase Agreement and to generate Net Revenues in amounts that are sufficient to pay the Series 2024 Installment Payments may be adversely affected by actions and events that are outside of the control of the City and may be adversely affected by actions taken (or not taken) by voters, property owners, taxpayers or persons obligated to pay assessments, fees and charges. See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218.” Furthermore, the remedies that are available to the owners of the Bonds upon the occurrence of an event of default under the Indenture are in many respects dependent upon judicial actions, which are often subject to discretion and delay and could prove both expensive and time-consuming to obtain.

In addition, usual equity principles may limit the specific enforcement under State law of certain remedies, as may the exercise by the United States of America of the powers delegated to it by the federal Constitution and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose. Bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium proceedings and other laws relating to or affecting creditors’ rights, or the exercise of powers by the federal or State government, if initiated, could subject the Beneficial Owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitations or modification of their rights. Remedies may be limited because the Water System serves an essential public purpose.

The opinion to be delivered by Bond Counsel concurrently with the issuance of the Bonds will be subject to such limitations and the various other legal opinions to be delivered concurrently with the issuance of the Bonds will be similarly qualified. See Appendix C. In the event that the City fails to comply with its covenants under the Installment Purchase Agreement or fails to pay the Series 2024 Installment Payments, which secure the payments of principal of and interest on the Bonds, there can be no assurance of the availability of remedies adequate to protect the interest of the holders of the Bonds.

Loss of Tax Exemption
In order to maintain the exclusion from gross income for federal income tax purposes of the interest on the Bonds, the Authority and the City have covenanted in the Indenture and the Installment Purchase Agreement, respectively, to comply with the applicable requirements of the Internal Revenue Code of 1986, as amended (the “Code”), and not to take any action or fail to take any action if such action or failure to take such action would adversely affect the exclusion from gross income of interest on the Bonds thereunder. Interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of issuance of such Bonds as a result of acts or omissions of the Authority or the City in violation of this or other covenants in the Indenture or the Installment Purchase Agreement. The Bonds are not subject to redemption or any increase in interest rates should an event of taxability occur and will remain outstanding until maturity or prior redemption in accordance with the provisions contained in the Indenture. See the caption “TAX MATTERS.”
Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that the Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices are suspended or terminated. Additionally, prices of issues for which a market is being 3227
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made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price.

Parity Obligations
The Installment Purchase Agreement permits the City to enter issue Parity Bonds payable from Net Revenues on a parity with the Series 2024 Installment Payments, which secure the Bonds, subject to the terms and conditions set forth therein. The issuance of Parity Bonds by the City could result in reduced Net Revenues available to pay the Series 2024 Installment Payments. The City has covenanted to maintain coverage of at least 125% of Debt Service, as further described under the captions “SECURITY FOR THE BONDS—Rate Covenant” and “—Additional Parity Bonds”
Climate Change
The State has historically been susceptible to wildfires and hydrologic variability. As greenhouse gas emissions continue to accumulate in the atmosphere as a result of economic activity, climate change is expected to intensify, increasing the frequency, severity and timing of extreme weather events such as coastal storm surges, drought, wildfires, floods and heat waves, and raising sea levels. The future fiscal impact of climate change on the City is difficult to predict, but it could be significant and it could have a material adverse effect on the Water System’s finances by requiring greater expenditures to counteract the effects of climate change or by changing the business and activities of Water System customers.

Cyber Security
Municipal agencies, like other business entities, face significant risks relating to the use and application of computer software and hardware. Recently, there have been significant cybersecurity incidents affecting municipal agencies, including a freeze affecting computer systems of the City of Atlanta, an attack on the City of Baltimore’s 911 system, an attack on the Colorado Department of Transportation’s computers, an attack that resulted in the temporary closure of the Port of Los Angeles’ largest terminal and an attack on a water treatment plant in Oldsmar, Florida.

The City employs a multi-layer cyber protection scheme including, third party consultant assistance, next-generation firewalls, anti-virus software, anti-spam/malware software, intrusion detection/prevention, domain name system filtering services, duplicate systems in a disaster recovery site and multiple copies of all information that is backed up. The City implements recommended strategies suggested by security vendors and makes internal system changes as needed. Over eight years ago, the City experienced a successful ransomware attack that affected a small number of files. The City was able to immediately isolate the issue and recover. The City has not experienced a successful attack against its network and servers since the above security measure have been put in place. There can be no assurance that a future attack or attempted attack would not result in the disruption of City operations. However, the City expects that any such disruptions would be temporary in nature due to its backup/restore procedures and disaster recovery planning.

The City has not experienced a successful attack against its network and servers since the above security measure have been put in place. Over eight years ago, the City experienced a successful ransomware attack that affected a small number of files. The City was able to immediately isolate the issue and recover. However, there can be no assurance that a future attack or attempted attack would not result in disruption of City operations. The City expects that any such disruptions would be temporary in nature due to its backup/restore procedures and disaster recovery planning.

Rate Covenant Not a Guarantee
The Series 2024 Installment Payments, which secure the Bonds, are payable from Net Revenues of the Water System. See the caption “SECURITY FOR THE BONDS.” The City’s ability to pay the Series 2024 3228
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Installment Payments depends on its ability to generate Net Revenues at the levels required by the Installment Purchase Agreement. Although the City has covenanted in the Installment Purchase Agreement to impose rates and charges as more particularly described under the caption “SECURITY FOR THE BONDS—Rate Covenant,” and although the City expects that sufficient Net Revenues will be generated through the imposition and collection of such rates and charges, there is no assurance that the imposition and collection of such rates and charges will result in the generation of Net Revenues in amounts that are sufficient to pay the Series 2024 Installment Payments. Among other matters, the availability of and demand for water and changes in law and government regulations could adversely affect the amount of Net Revenues realized by the City.

The failure to generate sufficient Net Revenues to pay the Series 2024 Installment Payments does not constitute a default or Event of Default under the Installment Purchase Agreement or the Indenture, provided that the City has set rates and charges at levels that it reasonably expects will generate sufficient Net Revenues at the beginning of each Fiscal Year.

THE AUTHORITY
The Authority was organized pursuant to the provisions of Articles 1 through 4 of Chapter 5 of Division 7 of Title 1 of the State Government Code and a Joint Exercise of Powers Agreement, dated as of June 1, 2013, by and between the City and the Ontario Housing Authority (the “Housing Authority”) for the purpose of assisting in the financing and refinancing of capital improvement projects of the City and related entities and to finance working capital for the City by exercising the powers referred to in the JPA Agreement, including the power to issue bonds to pay the costs of public improvements. Neither the City nor the Housing Authority is responsible for repayment of the obligations of the other. The members of the Board of Directors of the Authority are the members of the City Council of the City.

APPROVAL OF LEGAL PROCEEDINGS
The valid, legal and binding nature of the Bonds is subject to the approval of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, acting as Bond Counsel. The form of such legal opinion is set forth in Appendix C, and such legal opinion will be attached to each Bond. Certain matters will be passed upon for the City and the Authority by Best Best & Krieger LLP, Irvine, California, as City Attorney and General Counsel to the Authority, and by Stradling Yocca Carlson & Rauth LLP, as Disclosure Counsel, for the Underwriter by its counsel, Kutak Rock LLP, Irvine, California, for the Insurer by its counsel and for the Trustee by its counsel.

LITIGATION
General
At the time of delivery of and payment for the Bonds, the City will certify that there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, pending or, to the knowledge of the City, threatened against the City affecting the existence of the City or the titles of its directors or officers to their respective offices or seeking to restrain or to enjoin the sale or delivery of the Bonds or the application of the proceeds thereof in accordance with the Installment Purchase Agreement and the Indenture, or that could have a material adverse effect on the City’s ability to pay the Series 2024 Installment Payments, in any way contesting or affecting the validity or enforceability of the Bonds, the Indenture, the Installment Purchase Agreement or any action of the City contemplated by any of said documents, in any way contesting the completeness or accuracy of this Official Statement or any amendment or supplement thereto or contesting the powers of the City or its authority with respect to the Bonds or any action of the City contemplated by any of said documents, nor to the knowledge of the City, is there any basis therefor.
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Chino Basin Watermaster Litigation – CEQA Budget
The City is a co-appellant in certain litigation arising under the water rights Judgment in Chino Basin Municipal Water District v. City of Chino, et al., San Bernardino Superior Court No. RCVRS51010. The litigation concerns whether, under the terms of the Judgment, the Watermaster lawfully can budget and assess parties for funds to conduct environmental review under the California Environmental Quality Act (“CEQA”) with the Inland Empire Utilities Agency acting as Lead Agency, even though Watermaster itself is not subject to CEQA and the parties have not agreed upon any projects that would be subject to CEQA. In August 2022, certain parties to the Judgment, led by the City, filed a motion requesting that the Court exercise its continuing jurisdiction with respect to the Judgment in order to resolve this CEQA budget dispute. In November 2022, the Court issued an order denying the motion. In January 2023, the City and another party appealed from the order. The appeal was fully briefed in March 2024, and no date has been set yet for oral argument.

In the event of a favorable final ruling in this matter, the City’s obligation to pay a share of Watermaster’s expenses may be reduced. The City is unable to predict the likelihood of success in this matter at the present time. The City does not expect this matter to have a material adverse effect on the City’s ability to pay the Series 2024 Installment Payments.

Chino Basin Watermaster Litigation – Dry Year Yield Program The City is the appellant in consolidated appeals arising from the Chino Basin Watermaster’s failure to assess groundwater production from the Dry Year Yield (“DYY”) Program. The City’s lawsuit seeks to enforce provisions of the Judgment and subsequent DYY Program orders that define how assessments are calculated, who is eligible to participate in the DYY Program, how the DYY Program is administered, and procedural and due process requirements surrounding amendments to either the DYY Program or court orders.

Traditionally, and consistent with the Judgment, the Watermaster has assessed all groundwater produced from the Basin. This included stored water produced as part of the DYY Program, a conjunctive use program established for the storage of extra water during wet years and the corresponding recovery of that groundwater during dry years. The DYY Program, and the terms by which it operates, are legally rooted in the Judgment and subsequent court orders, including 2003 and 2004 orders specific to the DYY Program. After years of consistent administration, during the 2021-22 and 2022-23 assessment years, and without notice, the Watermaster modified its implementation of the DYY Program and the manner in which it calculated assessments. Specifically, the Watermaster did not levy assessments on water produced through the DYY Program and, for the first time, Watermaster allowed a party without a DYY Program local agency agreement to participate in the DYY Program and avoid payment of assessments on water produced. The Watermaster also allowed parties to produce groundwater from the DYY Program storage account in excess of the amounts permitted by the court’s prior DYY Program orders. The City’s resulting legal challenges to both the 2021-22 assessment package and the 2022-23 assessment package were denied by the trial court, and both cases are pending on appeal before the California Court of Appeal, Fourth Appellate District. The appeals challenge the superior court’s rulings that the Watermaster is not required to levy assessments on groundwater produced as part of the DYY Program, and failure to enforce the procedural and substantive provisions in the Judgment and the court’s prior DYY Program orders.

If the City obtains a favorable ruling in these consolidated cases, the 2021-22 and 2022-23 assessment packages will be corrected and amended to require parties to pay assessments on water produced from the DYY Program. This will have the corresponding effect of substantially reducing the City’s assessments for those years, thereby increasing available Net Revenues. The City is unable to predict the likelihood of success in this matter at the present time. The City does not expect this matter to have a material adverse effect on the City’s ability to pay the Series 2024 Installment Payments. 3230
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Chino Basin Program Litigation
The City is the plaintiff in certain litigation regarding the Chino Basin Program. The Chino Basin Program is a regional program proposed by the Inland Empire Utilities Agency (“IEUA”) to treat and inject water into the Chino Basin. In June 2022, the City filed its petition and complaint against IEUA in the Superior Court for the County of San Bernardino, City of Ontario v. Inland Empire Utilities Agency, et al., Case No. CIVSB2211925. The lawsuit seeks to invalidate IEUA’s approval of the Chino Basin Program and related actions by IEUA. The lawsuit alleges that IEUA violated the California Environmental Quality Act (“CEQA”) by approving the Chino Basin Program without conducting adequate environmental review, and that the Chino Basin Program will have significant adverse effects on the natural resources of the Chino Basin and the Santa Ana River, reducing the City’s water supply, and increasing the region’s reliance on imported water. The Court has vacated the trial/hearing dates because of ongoing disputes regarding discovery and preparation of the Administrative Record. In April 2024, the Court appointed a referee to make recommendations regarding discovery disputes. Currently, no hearing/trial date is set. The City is unable to predict the outcome of this lawsuit or the timing of any resolution thereof. The City does not expect this lawsuit to have a material adverse effect on the City’s ability to pay the Series 2024 Installment Payments.

Water Rate Litigation
The City is co-plaintiff in certain litigation against the Inland Empire Utilities Agency (“IEUA”) regarding a fixed charge imposed by IEUA on the City and other retail water agencies. IEUA calculates the fixed charge based on the number of meter equivalent units (“MEUs”) served by water agencies within IEUA’s boundaries. The lawsuit alleges that IEUA’s imposition of its MEU rate and MEU charges violates the California Constitution, Articles XIII C and XIII D (Propositions 218 and 26) because IEUA uses the MEU rate to fund a wide variety of projects and programs, but the rate is the same for all retail water agencies regardless of which programs and projects apply to each payor. The lawsuit seeks to invalidate IEUA’s adoption and imposition of the MEU rate and related actions by IEUA. Also, the lawsuit seeks to enjoin IEUA’s actions to collect the MEU charge, and it seeks refunds of certain MEU charges paid by plaintiffs. In February 2023, plaintiffs filed their initial petition and complaint in the Superior Court for the County of San Bernardino. The parties agreed to transfer the case to Orange County, and after completion of the transfer, in October 2023 plaintiffs filed an amended petition and complaint. The lawsuit is captioned City of Ontario, et al., v. Inland Empire Utilities Agency, Orange County Superior Court Case No. 30-2023-01344236-CU-WMCJC. Currently, discovery is underway, and a trial date is set for March 2025. The City is unable to predict the outcome of this lawsuit or the timing of any resolution thereof. The City does not expect any of this lawsuit to have a material adverse effect on the City’s ability to pay the Series 2024 Installment Payments.

Regional Sewer Service Contract Litigation
The City is the lead plaintiff in a lawsuit against IEUA alleging breaches of the Chino Basin Regional Sewerage Service Contract. The Contract provides for governance and funding of the regional sewage system that serves the City and other contracting agencies with sewer collection systems in the Inland Empire. In November 2023, plaintiffs filed their initial complaint and petition in the Superior Court for the County of San Bernardino. The lawsuit is captioned City of Ontario, et al., v. Inland Empire Utilities Agency, San Bernardino Superior Court Case No. CIVSB2328325. The lawsuit alleges breaches of the Contract by IEUA, including failure to negotiate in good faith to extend or renew the Contract on comparable terms and conditions. The lawsuit seeks to enforce contractual rights of the contracting agencies, especially their rights to recycled water, and it seeks to invalidate IEUA Ordinances Nos. 111 and 112 that claim to govern the regional sewage system and recycled water system following expiration of the Contract’s fifty-year term. In March 2024, the Court granted plaintiffs’ motion to transfer the case to Los Angeles County. The Court has not yet completed the transfer, and no trial date has been set. The City is unable to predict the outcome of this lawsuit or the timing of any resolution thereof. The City does not expect any of this lawsuit to have a material adverse effect on the City’s ability to pay the Series 2024 Installment Payments. 3231
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The Authority
At the time of delivery of and payment for the Bonds, the Authority will certify that there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, pending or, to the knowledge of the Authority, threatened against the Authority affecting the existence of the Authority or the titles of its directors or officers to their respective offices or seeking to restrain or to enjoin the sale or delivery of the Bonds or the application of the proceeds thereof in accordance with the Installment Purchase Agreement and the Indenture, or that could have a material adverse effect on the Authority’s ability to pay the Bonds, in any way contesting or affecting the validity or enforceability of the Bonds, the Indenture, the Installment Purchase Agreement or any action of the Authority contemplated by any of said documents, in any way contesting the completeness or accuracy of this Official Statement or any amendment or supplement thereto or contesting the powers of the Authority or its authority with respect to the Bonds or any action of the Authority contemplated by any of said documents, nor to the knowledge of the Authority, is there any basis therefor.

TAX MATTERS
In the opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. However, it should be noted that, with respect to applicable corporations as defined in Section 59(k) of the Internal Revenue Code of 1986, as amended (the “Code”), generally certain corporations with more than $1,000,000,000 of average annual adjusted financial statement income, interest (and original issue discount) with respect to the Bonds might be taken into account in determining adjusted financial statement income for purposes of computing the alternative minimum tax imposed by Section 55 of the Code on such corporations.

In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income tax.

Bond Counsel’s opinion as to the exclusion from gross income for federal income tax purposes of interest on the Bonds is based upon certain representations of fact and certifications made by the Authority, the City and others and is subject to the condition that the Authority and the City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds to assure that interest on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Authority and the City have covenanted to comply with all such requirements.

The amount by which a Bond Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Code; such amortizable bond premium reduces the Bond Owner’s basis in the applicable Bond (and the amount of taxexempt interest received with respect to the Bonds), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium.

The IRS has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an audit of similar municipal obligations). No assurance can be given that in the course of an audit, as a result 3232
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of an audit, or otherwise, Congress or the IRS might not change the Code (or interpretation thereof) subsequent to the issuance of the Bonds to the extent that it adversely affects the exclusion from gross income of interest on the Bonds or their market value.

SUBSEQUENT TO THE ISSUANCE OF THE BONDS, THERE MIGHT BE FEDERAL, STATE

OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR REGULATORY CHANGES TO OR

INTERPRETATIONS OF FEDERAL, STATE OR LOCAL LAW) THAT AFFECT THE FEDERAL, STATE

OR LOCAL TAX TREATMENT OF THE BONDS, INCLUDING THE IMPOSITION OF ADDITIONAL

FEDERAL INCOME OR STATE TAXES ON OWNERS OF TAX-EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE BONDS. THESE CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE BONDS. NO ASSURANCE CAN BE GIVEN THAT

SUBSEQUENT TO THE ISSUANCE OF THE BONDS STATUTORY CHANGES WILL NOT BE

INTRODUCED OR ENACTED OR JUDICIAL OR REGULATORY INTERPRETATIONS WILL NOT OCCUR HAVING THE EFFECTS DESCRIBED ABOVE. BEFORE PURCHASING ANY OF THE

BONDS, ALL POTENTIAL PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING

POSSIBLE STATUTORY CHANGES OR JUDICIAL OR REGULATORY CHANGES OR

INTERPRETATIONS, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE BONDS.

Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Indenture and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income of interest for federal income tax purposes with respect to any Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth LLP.

Although Bond Counsel has rendered an opinion that interest on the Bonds is excluded from gross income for federal income tax purposes provided that the Authority and the City continue to comply with certain requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest on the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Bonds.

Should interest on the Bonds become includable in gross income for federal income tax purposes, the Bonds are not subject to early redemption and will remain outstanding until maturity or until redeemed in accordance with the Indenture.

A copy of the proposed form of opinion of Bond Counsel is set forth in Appendix C.

CONTINUING DISCLOSURE
The City has covenanted in a Continuing Disclosure Certificate, dated the date of issuance of the Bonds (the “Continuing Disclosure Certificate”), for the benefit of the Owners and Beneficial Owners of the Bonds, to provide certain financial information and operating data relating to the City by not later than each March 31 following the end of the City’s Fiscal Year (currently its Fiscal Year ends on June 30) (the “Annual Report”), commencing with the report for the Fiscal Year ended June 30, 2024, and to provide notices of the occurrence of certain enumerated events. The Annual Report and the notices of enumerated events will be filed by the City with EMMA. The specific nature of the information to be contained in the Annual Report and the notice of enumerated events is set forth in Appendix E. These covenants have been made in order to assist the Underwriter in complying with Section (b)(5) of Rule 15c2-12. 3233
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The City and its related governmental entities (the “City Entities”) for whom City staff is responsible for undertaking compliance with continuing disclosure undertakings have previously entered into numerous disclosure undertakings under the Rule 15c2-12 in connection with the issuance of long-term obligations.

In order to ensure ongoing compliance with its continuing disclosure undertakings, the City has designated staff members within the Financial Services Agency with the responsibility of ensuring timely and complete filings. In addition, the City has retained an outside consultant to conduct periodic reviews of City compliance.

Within the last five years, the City and the City Entities have not failed to timely comply with their respective prior continuing disclosure obligations under Rule 15c2-12 in all material respects except that certain information with respect to outstanding indebtedness of the City was not included in the Fiscal Year 2021 annual report for the Ontario Public Financing Authority 2017 Lease Revenue Refunding Bonds, the City of Ontario 2020 Taxable Pension Obligations Bonds and the Ontario Public Financing Authority 2021 Lease Revenue Refunding Bonds, Series A (Federally Taxable); the City’s Fiscal Years 2020-21 and 2022-23 audited financial statements were not available at the time of the filing of 2021 and 2023 respective annual reports, but have since been posted and such information is included in the notes to the City’s Fiscal Year 2020-21 and 2022-23 audited financial statements.

RATING
S&P Global Ratings (“S&P”) has assigned the rating of “_____” to the Bonds. A rating is not a recommendation to buy, sell or hold securities. Future events could have an adverse impact on the rating of the Bonds, and there is no assurance that any credit rating that is given to the Bonds will be maintained for any period of time or that the rating may not be qualified, downgraded, lowered or withdrawn entirely by S&P if, in the judgment of S&P, circumstances so warrant. Any such qualification, downgrade, lowering or withdrawal of the rating may have an adverse effect on the market price of the Bonds. The rating reflects only the views of S&P (which views and criteria could change at any time), and an explanation of the significance of such rating may be obtained from S&P. Generally, a rating agency bases its ratings on the information and materials furnished to it (which may include information and material from the City that is not included in this Official Statement) and on investigations, studies and assumptions of its own.

The City has covenanted in the Continuing Disclosure Certificate to file notices of any rating changes on the Bonds with EMMA. See the caption “CONTINUING DISCLOSURE” and Appendix E.

Notwithstanding such covenant, information relating to rating changes on the Bonds may be publicly available from the rating agencies prior to the time that such information is provided to the City and prior to the date by which the City is obligated to file a notice of rating change. Purchasers of the Bonds are directed to the rating agencies and their respective websites and official media outlets for the most current ratings with respect to the Bonds after the initial issuance of the Bonds.

In providing a rating on the Bonds, S&P may have performed independent calculations of coverage ratios using its own internal formulas and methodology, which may not reflect the provisions of the Indenture.

The City and the Authority make no representations as to any such calculations, and such calculations should not be construed as a representation by the City or the Authority as to past or future compliance with any financial covenants, the availability of particular revenues for the payment of debt service or for any other purpose.

MUNICIPAL ADVISOR
The City has retained Urban Futures, Inc., Walnut Creek, California (the “Municipal Advisor”) as its municipal advisor in connection with the sale of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained herein. 3234
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The Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.

UNDERWRITING
The Bonds are being purchased by Samuel A. Ramirez & Co., Inc. (the “Underwriter”) pursuant to a purchase agreement, dated the date hereof, by and among the Authority, the City and the Underwriter. The Underwriter will purchase the Bonds from the Authority at an aggregate purchase price of $__________, representing the principal amount of the Bonds, [plus/less] $__________ of [net] original issue [premium/discount] and less $__________ of Underwriter’s discount.

The initial public offering prices stated on the inside front cover of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into investment trusts), dealer banks, banks acting as agents and others at prices lower than said public offering prices.

FINANCIAL INTERESTS
The fees being paid to the Underwriter, Bond Counsel, Disclosure Counsel and counsel to the Underwriter are contingent upon the issuance and delivery of the Bonds.

MISCELLANEOUS
Insofar as any statements made in this Official Statement involve matters of opinion or of estimates, whether or not expressly stated, they are set forth as such and not as representations of fact. No representation is made that any of such statements made will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the Owners of the Bonds.

The execution and delivery of this Official Statement have been duly authorized by the Authority and the City.

ONTARIO PUBLIC FINANCING AUTHORITY
By:

Executive Director

CITY OF ONTARIO
By:

City Manager
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APPENDIX A

CITY FINANCIAL STATEMENTS
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APPENDIX B

DEFINITIONS AND SUMMARY OF CERTAIN PROVISIONS OF THE INSTALLMENT

PURCHASE AGREEMENT AND THE INDENTURE
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APPENDIX C

FORM OF OPINION OF BOND COUNSEL
Upon issuance of the Bonds, Stradling Yocca Carlson & Rauth LLP, Bond Counsel, proposes to render its final approving opinion in substantially the following form:
[Closing Date]
Ontario Public Financing Authority
c/o City of Ontario
303 East B Street
Ontario, California 91764
Re: $__________ Ontario Public Financing Authority Water Revenue Bonds, Series 2024A Members of the Board of Directors:

We have acted as Bond Counsel to the Ontario Public Financing Authority (the “Authority”) in connection with the issuance of $___________ aggregate principal amount of Ontario Public Financing Authority Water Revenue Bonds, Series 2024A (the “Bonds”). The Bonds have been issued by the Authority pursuant to the terms of the Indenture of Trust, dated as of _____ 1, 2024 (the “Indenture”), by and between the Authority and U.S. Bank National Association, as trustee (the “Trustee”).

The Bonds are limited obligations of the Authority payable solely from payments to be made by the City of Ontario (the “City”) to the Authority pursuant to an Installment Purchase Agreement, dated as of _____ 1, 2024 (the “Installment Purchase Agreement”), by and between the City and the Authority, and from certain funds and accounts established under the Indenture.

In connection with our representation, we have examined a certified copy of the proceedings relating to the Bonds. As to questions of fact material to our opinion, we have relied upon the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigations.

Based upon the foregoing and after examination of such questions of law as we have deemed relevant in the circumstances, but subject to the limitations set forth herein, we are of the opinion that:

1. The proceedings of the Authority show lawful authority for the issuance and sale by the Authority of the Bonds under the laws of the State of California (the “State”) now in force, and the Indenture has been duly authorized, executed and delivered by the Authority. Assuming due authorization, execution and delivery by the Trustee, as appropriate, the Bonds and the Indenture are valid and binding obligations of the Authority enforceable against the Authority in accordance with their respective terms.

2. The obligation of the Authority to make the payments of principal and interest on the Bonds from Authority Revenues (as such term is defined in the Indenture) is an enforceable obligation of the Authority and does not constitute an indebtedness of the Authority in contravention of any constitutional or statutory debt limit or restriction.

3. Under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals; however, 3238
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with respect to applicable corporations as defined in Section 59(k) of the Internal Revenue Code of 1986, as amended (the “Code”), interest (and original issue discount) with respect to the 2024 Bonds might be taken into account in determining adjusted financial statement income for purposes of computing the alternative minimum tax imposed on such corporations.

4. Interest on the Bonds is exempt from State personal income tax.

5. The amount by which a Bond Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium, which must be amortized under Section 171 of Code; such amortizable Bond premium reduces the Bond Owner’s basis in the applicable Bond (and the amount of taxexempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium.

The opinions that are expressed herein as to the exclusion from gross income of interest on the Bonds are based upon certain representations of fact and certifications made by the City and the Authority and are subject to the condition that the City and the Authority comply with all requirements of the Code that must be satisfied subsequent to issuance of the Bonds to assure that interest on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The City and the Authority have covenanted to comply with all such requirements.

The opinions that are expressed herein may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. Our engagement with respect to the Bonds terminates on the date of their issuance. The Indenture, the Installment Purchase Agreement and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. No opinion is expressed herein as to the effect on the exclusion from gross income of interest on the Bonds for federal income tax purposes if any such action is taken or omitted based upon the opinion or advice of counsel other than ourselves. Other than expressly stated herein, we express no other opinion regarding tax consequences with respect to the Bonds.

Our opinion is limited to matters governed by the laws of the State and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.

The opinions that are expressed herein are based upon our analysis and interpretation of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the rights and obligations under the Indenture, the Installment Purchase Agreement and the Bonds are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State.

We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and expressly disclaim any duty to advise the Owners of the Bonds with respect to matters contained in the Official Statement.

Respectfully submitted,
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APPENDIX D

INFORMATION CONCERNING DTC
The information in this section concerning DTC and DTC’s book-entry only system has been obtained from sources that the Authority, the City and the Underwriter believe to be reliable, but none of the Authority, the City or the Underwriter takes any responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, premium, if any, accreted value, if any, and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds.

The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered bond will be issued for each annual maturity of the Bonds, each in the aggregate principal amount of such annual maturity, and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts 3240
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such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Authority or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

A Bond Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant’s interest in the Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Bonds to the Trustee’s DTC account. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, physical certificates are required to be printed and delivered.

The Authority may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, bonds will be printed and delivered to DTC.

THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY

FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY

ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE

VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. 3241
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APPENDIX E

FORM OF CONTINUING DISCLOSURE CERTIFICATE
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Department: Management Services
Prepared By: Jordan T Villwock
Staff Member Presenting: Jordan Villwock,
Management Services Director
Reviewed By: Vanny Khu
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 35
SUBJECT: WEST-END ANIMAL SERVICES AGENCY JOINT POWERS AUTHORITY AGREEMENT

WITH THE CITY OF CHINO

CITY OF ONTARIO
Agenda Report
July 16, 2024
SECTION:

ADMINISTRATIVE

REPORTS/DISCUSSION/ACTION
RECOMMENDATION: That the City Council consider and:

A. Approve the Joint Exercise of Powers Agreement establishing the West-End Animal Services Agency (Agency) and authorize the City Manager to execute the Agreement on behalf of the City;
B. Appoint two Councilmembers to serve as Directors, and one Councilmember as an Alternate, to serve on the Agency's Board of Directors;
C. Authorize the City of Ontario to serve as the Agency's Interim Administrator and to provide administrative services to the Agency, including a Treasurer/Auditor-Controller and Secretary, and authorize the City Manager to execute an Agreement or other instrument establishing the cost of providing the administrative services;
D. Authorize the City Manager to take all other actions and execute all other documents or appropriate to carry out the terms of the Agreement and the City's role as Interim Administrator.

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Operate in a Businesslike Manner
Pursue City's Goals and Objectives by Working with Other Governmental Agencies FISCAL IMPACT: The City of Ontario will fund approximately 65 percent of the costs of operating the West End Animal Services Agency. Within 90 days of the execution of the agreement, the Agency will adopt a budget for operational and capital costs, and costs of special services and contract services. Appropriations attributable to the City of Ontario will be included at a future quarterly update.

BACKGROUND & ANALYSIS: For several years, the City of Ontario has contracted with the Inland Valley Humane Society (IVHS) to provide animal services. Unfortunately, this partnership has deteriorated, leading to a noticeable decline in service quality, increased community concerns, 3243
along with a continued lack of transparency, collaboration, and communication by IVHS. Despite multiple efforts over the past year by City Staff to improve relations, which included a site visit, requesting to fund additional services, hosting and funding a team-building session, and participating in several meetings - IVHS issued a 180-notice on April 15, 2024, indicating they are canceling the contract effective June 30, 2025.

While the City of Ontario had not initially intended to establish its own animal services agency, this situation presents a unique opportunity. By partnering with the City of Chino, City Staff proposes forming a Joint Powers Authority (JPA), named the West-End Animal Services Agency. The JPA model will offer local control, enhanced services, and improved community relations.

The West-End Animal Services Agency will be a full-service animal services agency that will provide both animal control and sheltering services to member agencies. To allow the West-End Animal Services Agency to begin its work while recruiting an Executive Director and staff, the JPA Agreement authorizes one or both of the Member Agencies to serve as Interim Administrator and provide certain administrative services to the JPA. For example, the Interim Administrator would provide staff to serve as Treasurer/Auditor-Controller and Secretary, among other things. Staff's recommended actions would allow the City to serve as Interim Administrator and authorizes the City Manager to take such actions as necessary to provide needed services to the Agency during the start-up period.

JPA Governance Structure
The City of Ontario shall appoint two regular Directors while the City of Chino shall appoint one Director to serve on the JPA Board of Directors. If there are three or more parties to this Agreement, the governing body of each Member Agency shall appoint one regular Director. Voting shares will be determined by the proportion of services provided to each Member Agency based upon actual or estimated number of calls for animal control services from each Member Agency, the number of animals sheltered from each Member Agency, and/or other factors reasonably bearing on the Agency's costs, as reasonably determined by the Board. 3244
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JOINT EXERCISE OF POWERS AGREEMENT
OF

THE WEST END ANIMAL SERVICES AGENCY
This JOINT EXERCISE OF POWERS AGREEMENT (the “Agreement”) is dated this day of , 20 , for reference purposes only, and is entered into by and between the cities of Ontario and Chino, who may be referred to herein individually as a “Member Agency” or “Party” and collectively as “Member Agencies,” “Members,” or Parties.”

RECITALS
A. The Member Agencies have the authority under California law to operate animal shelters and provide associated animal control programs within their respective jurisdictions.

B. Each Member Agency is a public agency authorized and empowered to contract with the other Member Agency for the joint exercise of powers under the Joint Exercise of Powers Act, Sections 6500, et seq., of the California Government Code (the “Act”).

C. Each Member Agency is a local public entity, and are municipalities in contiguous geographical proximity, having similar animal control and sheltering needs, and a history of coordination and cooperation between each other.

D. Each Member Agency presently contracts with the Inland Valley Humane Society for animal shelter and control services, but desires to transition to jointly providing and managing such services directly, in order to achieve cost savings and operational efficiencies for the benefit of the persons residing in the Member Agencies’ respective service areas.

E. The Member Agencies desire to enter into this Agreement to create the West End Animal Services Agency as a joint powers agency for the purposes set forth herein.

NOW, THEREFORE, for and in consideration of the mutual covenants and conditions hereinafter stated, the Member Agencies agree as follows:

1. Recitals. The recitals above are true and correct, and are hereby incorporated into the terms of this Agreement as though fully set forth herein.

2. Term. The term of this Agreement shall commence as of August 1, 2024 or the date the Member Agencies have fully executed this Agreement, whichever is later, and continue until terminated pursuant to the terms of this Agreement.

3. Definitions. Except where the context otherwise clearly requires, the following words and phrases shall have the meanings specified below:
“Act” shall mean the Joint Exercise of Powers Act of the State of California, commencing with California Government Code Section 6500, as now existing or as may hereinafter be amended or supplemented.
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“Agency” shall mean the West End Animal Services Agency, a joint powers authority created by this Agreement in accordance with the Act, made up of the Member Agencies. “Agency Area” means that geographic area encompassing the total combined jurisdictional boundaries of the Member Agencies, as lawfully changed from time to time. “Agreement” shall mean this Joint Exercise of Powers Agreement by and between the Member Agencies, as supplemented, amended, and/or restated from time to time. “Board” or “Board of Directors” means the governing body of the Agency as established by this Agreement.
“Board Member” or “Director” means a member of the governing body of the Agency. “Fiscal Year” means July 1 of one year through June 30 of the following year. “Formation Date” means the date when this Agreement took effect pursuant to Section 2.

4. Creation of Agency.

4.1 Agency Created. The Agency is formed pursuant to the provisions of the Act, which authorizes two or more public agencies, by a joint powers agreement entered into respectively by them and authorized by their legislative or governing bodies, to exercise jointly any power or powers common to the member agencies. The Agency shall be a public entity separate from the Member Agencies and is responsible for the administration of this Agreement. (a) Confirmation of Agency Name. The Agency is known as the “West End Animal Services Agency.”

4.2 Notices. Within thirty (30) days after the Formation Date, the Agency shall cause a notice of its formation to be prepared and filed with the office of the California Secretary of State containing the information required by California Government Code § 6503.5. Within seventy (70) days after the Formation Date, the Agency shall cause a statement of information concerning the Agency, as required by California Government Code § 53051, to be filed with the office of the California Secretary of State and with the County Clerk, of any information as required by Government Code § 53051(a).

4.3 Agency Area. The geographic boundaries of the Agency (“Agency Area”) shall be coextensive with those of the Member Agencies, as may be lawfully changed from time to time.

4.4 Bylaws. The Board may adopt bylaws and any other regulations, policies, or procedures for the operation of the Agency not inconsistent with State constitutional, statutory, or decisional case law, the California Code of Regulations, or this Agreement. 3246
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4.5 Purpose.
(a) The purpose of this Agreement is to jointly exercise animal control, animal shelter, and related services, and to facilitate cooperation among the Member Agencies with respect to issues related to the operation and management of an animal shelter and administrative oversight thereof, as well as provision of animal services within each Member Agency’s jurisdiction and within the jurisdictions of such agencies as the Agency may contract with for such services. The purpose shall be accomplished in the manner set forth in this Agreement. The Member Agencies each possess the powers necessary or convenient for the accomplishment of such purposes.
(b) Through the Agency and its governing body, the Member Agencies shall collaborate, cooperate and seek to determine ways in which the Member Agencies, the citizens residing within the Agency Area, and other agencies who may contract with the Agency for animal control or shelter needs can benefit from joint services. (c) The Member Agencies shall jointly benefit through the sharing of resources, which may include but is not limited to the sharing of executive and/or administrative staff. Among other public benefits, the Member Agencies and those with whom the Agency contracts shall receive reduced costs and more efficient services through the sharing of such resources.
(d) The purposes of this Agreement shall not be construed as limiting, and the Agency and its Board shall be authorized to further define the means by which the joint exercise of services may be accomplished.
(e) The Agency may, if approved pursuant to the provisions of this Agreement, accept new Parties to this Agreement, and the purposes of this Agreement shall include the provision of animal control, animal shelter, and related services within the territorial jurisdiction of any new Parties. The purposes of this Agreement shall apply to any new Parties.

5. Powers of Agency.

5.1 Generally. The Agency shall exercise the powers common to the Member Agencies, powers otherwise permitted under the Act, and powers necessary to accomplish the purposes of this Agreement.

5.2 Specific Powers. The Agency is hereby authorized, in its own name, to do all acts necessary, convenient and appropriate for the exercise of the foregoing powers for the purposes set forth in this Agreement and to do any or all of the following:
(a) Setting and adopting policies for the operation of the Agency. (b) Adopting an annual budget.
(c) Employing personnel, consultants, advisors and independent contractors, setting parameters for labor negotiations, and ratifying labor agreements. 3247
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(d) Entering into contracts, leases and other agreements, which may include, but are not limited to, a contract for administrative and fiscal services and a contract with a Certified Public Accountant for annual audit services or contracts for service to other jurisdictions.
(e) Applying for, receiving and disbursing grants, loans or other aid from any private or public agency.
(f) Cooperate with other agencies, nonprofit groups and private entities as appropriate to participate in joint projects related to animal control or sheltering services, or any other purpose of the Agency set forth in this Agreement. (g) Setting fees for service where permitted by law.
(h) Receiving, disbursing and investing funds.
(i) Purchasing and holding title to property, and obtaining leaseholds, licenses and other interests in property, including the authority to acquire, dispose of, construct, manage, maintain or operate any building, works or improvements. (j) Issuing revenue bonds pursuant to California Government Code Section 6540, et seq.
(k) Obtaining in its own name all necessary permits, licenses, opinions and rulings.
(l) Expending funds of the Agency, only for the purpose of carrying out the provisions of this Agreement as they now exist or may hereafter be amended. Such powers shall be exercised in the manner provided in the Act subject only to such restrictions as set forth in this Agreement or other applicable law.
(m) Suing and being sued in its own name.
(n) Carrying out and enforcing all of the provisions of this Agreement. (o) To incur debts, liabilities or obligations, which do not constitute a debt, liability or obligation of any Member Agency except as otherwise required by law. (p) To receive gifts, contributions and donations of property, funds, services and other forms of assistance from persons, firms, corporations and governmental entities, provided that the Agency consents to such gifts, contributions and donations. (q) To fix the compensation, if any, paid to the Board of Directors, Executive Director of Animal Services, Secretary, Treasurer, Controller and Attorney, in compliance with all applicable laws.
(r) To prescribe the duties, compensation and other terms and conditions of employment of other agents, officers and employees.
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(s) To adopt reasonable rules and regulations for the conduct of the day-today operations of the Agency. (t) To invest money in the treasury, pursuant to Government Code section 6505.5, that is not required for the immediate necessities of the Agency, as the Agency determines advisable, in the same manner and on the same conditions as local agencies, pursuant to Section 53601 of the Government Code.
(u) To exercise any and all powers which are provided for in the Act as they exist on the Formation Date or may hereafter be amended. (v) Other powers and duties incidental to those enumerated herein.

5.3 Manner of Exercise of Common Powers. The powers of the Agency shall be limited only by the terms of this Agreement, the Act, and applicable law, as amended from time to time. The laws of the State of California applicable and common to general law cities shall govern the Agency in the manner of exercising its powers common between the cities, subject to such restrictions as are applicable to the City of Ontario in the manner of exercising such powers, as required by Government Code section 6509.

6. Governance.

6.1 Board of Directors. The Agency shall be governed by a Board of Directors (“Board”) composed of Directors representing the Member Agencies (each a “Board Member” or “Director”). If there are two Member Agencies, the governing body of the City of Ontario shall appoint and designate in writing two regular Directors and the governing body of City of Chino shall appoint and designate in writing one regular Director. If there are three or more Parties to this Agreement, the governing body of each Member Agency shall appoint one regular Director. Each Director, and any alternate, shall be a member of the Member Agency’s governing body. Each Member Agency will be entitled to representation on the Board in accordance with its financial contribution proportion (as set forth in Exhibit B to this Agreement) and as further described in Section 6.4(d), below. Each of the Board Members, and any alternates, shall be appointed as determined by the respective Member Agencies’ governing bodies and any applicable local policies. Each Director and alternate serves at the pleasure of the appointing Member Agency’s governing body and may be removed at any time, with or without cause, at the sole discretion of the appointing Member Agency’s governing body. If a Director or alternate’s membership on the appointing Member Agency’s governing body ceases, his or her membership on the Board shall also cease. All the powers and rights of the Agency shall be exercised by the Board, subject to the rights reserved by the Member Agencies as set forth in this Agreement; provided, however, that the Board may delegate such powers and authority to committees, sub-committees, and others as the Board deems appropriate. The alternate appointed by each Member Agency shall have the authority to attend, participate in and vote at any meeting of the Board when the regular member is absent.

6.2 Compensation. Directors may receive such compensation from the Agency for services as may from time to time be established by the Board, subject to the limits of applicable 3249
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law. Directors shall be reimbursed for necessary and actual expenses incurred in the conduct of the Agency’s official business as permitted by law and by policies adopted by the Board.

6.3 Board Officers. The role of Board Chair and Vice Chair shall be filled as follows:
(a) The Board of Directors shall, at its first meeting and periodically thereafter as may be specified in its Bylaws or otherwise agreed upon, elect a Chair and Vice-Chair by majority vote. The Chair and Vice-Chair shall coordinate with the Secretary to set meeting agendas and shall also have the duties set forth in any adopted Bylaws of the Agency. If either the Chair or Vice-Chair ceases to be a Director, the resulting vacancy will be filled at the next meeting of the Board.
(b) The Chair, or in the Chair’s absence the Vice Chair, shall preside at and conduct all meetings of the Board and execute agreements and other official instruments on behalf of the Agency. In the absence or inability of the Chair to act, the Vice Chair shall act as Chair. In the absence of the Chair and the Vice Chair, the absent members may appoint a different member of the Board to serve as an alternate.

6.4 Meetings of the Board.
(a) Annual Meeting. The Board shall hold an annual meeting to review the services provided by the Agency and to consider approval of a budget, which shall be a regular meeting conducted in accordance with the provisions of the Ralph M. Brown Act, Sections 54950 et seq. of the California Government Code. The Board may hold additional regular meetings as determined by the Board and may adopt such procedures and resolutions for conducting such meetings and other business as the Board deems appropriate. Alternatively, the Board may establish an executive or other committee to hold regular meetings. (b) Conduct of Meetings. All meetings of the Board including, without limitation, regular, adjourned regular, and special meetings shall be called, noticed and conducted in accordance with the provisions of the Ralph M. Brown Act, Sections 54950 et seq. of the California Government Code.
(c) Quorum. A simple majority of the Board that also represents at least 50% of the Agency’s Voting Shares (defined below) shall constitute a quorum for the purpose of transacting business. In the absence of a quorum at any meeting of the Board, a majority of the Directors present, or the Chair in the absence of all Directors, or the Secretary may adjourn the meeting from time to time without further notice, but no other business may be transacted. (d) Voting. Once a quorum has been established, in general, except when Special Voting is expressly required pursuant to subsection (i) below, the affirmative vote of a majority of the quorum that also represents at least 50% of the Agency’s Voting Shares shall be required for the Agency to take any action. All votes taken pursuant to this section shall be referred to as a “Regular Vote.” The consequence of a tie vote or a majority vote that does not represent at least 50% of the Agency’s Voting Shares shall be “no action” taken. (i) “Special Voting” requiring higher or different thresholds is required: (i) where different voting requirements are provided for by applicable law or this 3250
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Agreement; and (ii) approval of the annual budget and amendments, issuance of any bonds, exercise of eminent domain, incurrence of any debts, liabilities, obligations, certificates of participation or other evidence of indebtedness, and confirmation of the nominee for the position of Executive Director of Animal Services, each of which shall require an affirmative vote of the majority of the membership of the Board representing at least 50% of the Agency’s Voting Shares and, in addition, an affirmative vote of Board Members representing at least two Member Agencies. This section shall not prohibit the Board from delegating the authority to purchase goods and services, including goods and services consistent with any adopted or applicable Agency purchasing policy, specified herein.
(ii) “Voting Shares” means the respective voting shares of each Member Agency as established in Exhibit B, as may be updated from time to time in the manner described therein. If the City of Ontario has two Directors on the Board, the Voting Shares attributable to the City of Ontario shall be divided equally between the Ontario Directors. (e) Location and Date. The Board shall meet at the Agency’s principal governance and business office as set forth in a resolution adopted by the Board, or at such other place as may be designated by the Board for its regular, adjourned regular, and special meetings consistent with this Agreement. The dates upon which, and the hour and place at which, any regular meeting shall be held shall be fixed by resolution of the Board and a copy of such resolution shall be provided to each Member Agency.
(f) Agendas and Minutes. The Board may select, appoint, or employ a Secretary to keep or cause to be kept, at the principal business office, the principal governance office, or such other place as the Board may order, a book or electronic copy of minutes of all meetings of the Board and its committees as required by law, with the time and place of holding, whether regular or special, the notice thereof given, the names of those present at the meetings, and the proceedings thereof. As soon as practicable after each meeting, the Secretary shall cause a copy of the minutes to be forwarded to each director of the Board, and to the Member Agencies. The Secretary need not be a director and shall serve at the pleasure of the Board.

6.5 Board Committees
(a) Committees. The Board may create any standing or ad hoc committees as it sees fit. The Board may delegate to any committee the authority to approve any action or transact any business of the Board, except for business that is required by this Agreement to be approved by the full Board.
(b) Actions of Full Board. Approval of budgets, issuance of any bonds, exercise of eminent domain, and incurrence of any debts, liabilities, obligations, certificates of participation or other evidence of indebtedness as may be set forth in the Agency’s effective purchasing policy and any legislative actions as defined by State law shall require an action of the full Board and shall not be delegated to any Board committees. (c) Procedures. Except for exempt ad hoc committees, all meetings of committees including, without limitation, regular, adjourned regular, and special meetings shall be called, noticed and conducted in accordance with the provisions of the Ralph M. Brown Act, 3251
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Sections 54950 et seq. of the California Government Code. Committees shall maintain minutes of their proceedings.

7. Executive Officers and Personnel

7.1 Executive Officers. The executive officers of the Agency shall include the Executive Director of Animal Services, Treasurer, Auditor/Controller, Secretary, and such other executive offices as created by the Board. All executive officers shall report to the Board. (a) Executive Director of Animal Services. The Executive Director of Animal Services will be an officer nominated by a Nominating Committee composed of the City Manager of each Member Agency, or their designees, and subject to confirmation by the Board.

The Nominating Committee may nominate one or more candidates for final consideration and appointment by the Board. The Executive Director of Animal Services shall carry out the decisions of the Board and act as the signatory for the Agency on all actions requiring approval of the Board unless otherwise required by law. The Executive Director of Animal Services shall be responsible for the proper and efficient day-to-day operation of the Agency as is or hereafter may be placed in his or her charge, or under his or her jurisdiction or control, pursuant to the provisions of this Agreement, or of any ordinance, resolution, bylaw or minute order of the Board. The Board shall confirm the nominee for the position of Executive Director of Animal Services (by an affirmative vote of the majority of the membership of the Board representing at least 50% of the Agency’s Voting Shares and, in addition, an affirmative vote of Board Members representing at least two Member Agencies) and oversee the performance of the Executive Director of Animal Services. The Executive Director of Animal Services shall report to the Board on all of the following, in a manner prescribed by the Board:
(i) Plan, coordinate, supervise, and evaluate the Agency’s operations, and conduct day-to-day operations of the Agency;
(ii) Supervise and manage Agency personnel;
(iii) Make recommendations to the Board on Agency operations; (iv) Establish policies and procedures of the Agency to implement directives from the Board;
(v) In conjunction with the Treasurer, prepare an annual budget for submission to the Board.

The Executive Director of Animal Services shall be subject to dismissal by a majority vote of the Board representing at least 50% of the Voting Shares of the Agency. (b) Treasurer. The Board shall appoint as the Agency Treasurer: (1) the Treasurer or Finance Director of one of the Member Agencies; (2) a certified public accountant; or (3) such other officer or employee of one of the Member Agencies as the Board shall deem qualified to act as the Agency Treasurer, so long as permitted by law. The Agency Treasurer shall perform such duties as are set forth in this Agreement and any other duties specified by the Board or as required by the Act, and shall perform the duties specified in Government Code 3252
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sections 6505 and 6505.5, as amended from time to time. The Agency Treasurer shall be the depositary of funds and shall have custody of all money of the Agency, from whatever source.

The Board may at any time select, employ, or appoint a new or different Agency Treasurer meeting one or more of the above qualifications.
(c) Auditor/Controller. The initial Agency Auditor or Agency Controller shall be the same person serving as the Agency Treasurer. The Agency Auditor or Agency Controller shall perform such duties as are set forth in this Agreement and any other duties specified by the Board or as required by the Act. The Board may at any time select, employ, or appoint a new or different Agency Auditor or Agency Controller who shall be: (1) the auditor or controller of one of the Member Agencies; or (2) such other officer or employee of one of the Member Agencies as the Agency shall deem qualified to act as Agency Auditor or Agency Controller, so long as permitted by law.
(d) Secretary. The Board shall appoint a Secretary who shall serve at the pleasure of the Board. The Secretary shall be the official custodian of records for the Agency, make all filings requested by the Board and legally required, and be responsible for agendas and meeting minutes as provided in Section 6.4(f) of this Agreement.

7.2 Official Bond. Pursuant to Government Code section 6505.1, the public officer, officers or persons who have charge of, handle or have access to any property of the Agency shall file an official bond in an amount of $25,000, unless fixed by the Parties to this Agreement in a different amount by unanimous decision of the Board.

7.3 Other Officers and Staff
(a) Attorney for Agency. The Board of Directors may appoint a person, office, or firm to serve as Attorney for the Agency, who would attend all meetings of the Board of Directors; provided, however, that the absence of the Agency Attorney shall not affect the validity of any meeting. The Attorney shall perform such other duties as the Board of Directors specifies.
(b) Officers and Professional Services. The Board may select, appoint, or employ any other officers, or providers of professional and expert services, as may be necessary or appropriate to accomplish the purposes of this Agreement, including but not limited to, legal counsel, financial consultants, accountants, engineers, architects, contractors, appraisers and any other consultants and advisors, which may be a corporation, partnership, firm or individual. The Board may delegate to the Executive Director of Animal Services or to a committee the authority to hire officers and professional services.
(c) Shared Resources. The Board may contract with a Member Agency to provide necessary administrative services to the Agency as appropriate. All personnel employed by the individual Member Agencies shall remain employees of their respective Member Agency unless and until the Agency affirmatively employs such personnel pursuant to its powers. No express or implied employment contract between any Member Agency employee and the Agency exists as a result of this Agreement. The Board may designate a Member Agency to serve as Interim Administrator as further described in Exhibit A. 3253
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7.4 Interference Prohibited. The Board and the Member Agencies shall deal with the administrative services of the Agency (which includes the Agency’s Treasurer, Auditor/Controller and Secretary) only through the executive officer of the Member Agency providing the administrative services (if provided by a Member Agency) or the Executive Director of Animal Services (if provided by an employee of the Agency), except for the purpose of inquiry. Neither the Board, the governing body of any Member Agency, nor any individual members of either shall give orders to any subordinate of the Executive Director of Animal Services.

7.5 Rules and Regulations. The Board shall forthwith adopt rules and regulations and perform all other acts necessary so that the Agency may hire personnel.

8. Equipment and Facilities.

8.1 Animal Shelter and Other Real Property.
(a) Animal Shelter and Administrative Buildings. The buildings that house the animal shelter and administration office operated by the Agency will be constructed by and owned by the Agency. The real property upon which the shelter building will be located is currently owned by the City of Ontario and is intended to be transferred to the Agency pursuant to a separate agreement. The original Member Agencies (the cities of Ontario, Chino, and any new Member Agencies who join the Agency pursuant to Section 14 of this Agreement by July 1, 2025) shall be the only entities with an ownership interest in the above-described real property following its transfer, and shall pay the Agency for their respective ownership interests in the property through their quarterly payments to the Agency over a period determined by the Agency and the original Member Agencies. New Member Agencies who join the Agency pursuant to Section 14 of this Agreement shall have an ownership interest in any other real property purchased by the Agency or construction pursuant to a construction contract awarded following the effective date of their inclusion in the Agency, and shall have the opportunity to assume the ownership interest of an original Member Agency should an original Member Agency withdraw from the Agency pursuant to Section 16 of this Agreement. (b) Member Agency Buildings and Structures. Buildings and structures existing and owned by Member Agencies prior to the effective date of this Agreement may be utilized for the Agency’s use, but shall remain the property of the respective Member Agency.

Each Member Agency shall be responsible for the maintenance and insurance of Member Agency buildings. The Agency shall not directly own, maintain, or insure any existing building or structure other than those identified in subsection (a) above, unless the Agency and a Member Agency expressly agree in writing that the Agency accepts ownership, responsibility for maintenance, or responsibility to insure a particular building or structure. Any building constructed or owned by the Agency after the Formation Date shall be the property of the Agency, and in the event of dissolution of the Agency, shall be disposed of as provided in this Agreement.
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(c) Contributions of Real Property. Any Member Agency may contribute real property to the Agency for the Agency’s use. The Member Agency owning the interest in the real property shall continue to own said interest, unless the Member Agencies and Agency agree otherwise. The Board and the Member Agency owning the interest shall agree on the terms of the contribution.
(d) Lease or Purchase of Additional Stations. The Agency shall be authorized to lease, purchase, or obtain any other interest in real property for the Agency’s uses.

8.2 Equipment and Other Personal Property.
(a) Equipment Provided by Member Agencies. As soon as reasonably practicable, the Agency shall inventory all equipment owned by the Member Agencies that is available for the Agency’s use. All Member Agency equipment shall remain the property of that Member Agency, unless the Agency and that Member Agency otherwise agree. The Member Agency may contribute additional equipment for the Agency’s use upon terms agreed between the Member Agencies and the Agency. The Agency may rent or borrow equipment from the Member Agencies for temporary use. All equipment owned by the Agency or subject to an equipment lease for financing purposes, shall remain the property of the Agency. (b) Acquisition of Equipment. The Agency may acquire any equipment or other personal property for the Agency’s use.

8.3 Separate Property of the Parties. Exhibit C, attached and incorporated by reference, establishes the property which is owned by a Member Agency and not the Agency, notwithstanding that the Agency may use that property.

9. Financial Provisions.

9.1 Administrative Services. Administrative services may be provided by the Member Agencies as described in Exhibit A, attached and incorporated by reference to this Agreement.

9.2 Operational and Capital Costs. All operational and capital improvements costs shall be allocated among the jurisdictions in accordance with the cost-sharing formula in Exhibit B, adopted by the Board and the governing bodies of the Member Agencies, and attached and incorporated by reference into this Agreement. Operational costs shall include costs for administrative services described in Exhibit A.

9.3 Billing of Members. Member Agencies will be billed quarterly by the Agency Treasurer, in accordance with the provisions of this Agreement Exhibit B. Member Agencies agree to pay the invoices on a quarterly basis.

9.4 Capital Purchases. Capital purchases that solely benefit a Member Agency shall be funded by that Member Agency. All other capital purchases shall be funded on terms established by the Board. The funding of capital purchases that are not budgeted shall be separately approved by the Board.
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9.5 Budget.
(a) Adoption. The Board shall initially adopt a budget within 90 days of execution of this Agreement. The Board shall adopt a budget for operation and capital costs, and costs of special services and contract services, in time to allow review by the Member Agencies prior to April 30th of each fiscal year. The Agency’s fiscal year shall be July 1 to June 30. No expenditures may be made by or on behalf of the Agency unless authorized by a budget or budget amendment approved by the Board.
(b) Failure to Obtain Budget Approval. In the event the Board does not adopt a budget prior to start of a fiscal year, the budgeted amounts of all expenses shall, except as required for debt payments or provided in multi-year agreements and other similar continuing legal obligations, remain the same as the amounts last approved by the Board in its most recently adopted budget; provided, however, that the amounts shall be increased by the Consumer Price Index (“CPI”). The CPI shall mean the Bureau of Labor Statistics’ Consumer Price Index for All Urban Consumers in the Riverside-San Bernardino-Ontario area (Riverside-San BernardinoOntario CPI-U) for the twelve (12) month period ending the January prior to the beginning of the fiscal year. This factor shall be applied to the budget until such time as a new budget is adopted by the Board. Any shortfall in available funds and other non-reserve funds shall be made up from available reserves dedicated by the Board for such purpose and, if insufficient to cover the shortfall, any available reserve funds which have not been designated by the Board for a particular purpose or otherwise legally restricted for other purposes. Reserves shall mean any available cash or investments. In the event that a shortfall in available funds exceeds available unrestricted reserves of the Agency, such resulting unfunded shortfall shall be carried forward into the subsequent fiscal year. Member Agencies shall have no obligation to cure such unfunded shortfall other than as may be provided in a separate agreement, including, but not limited to, a special services agreement under Exhibit B.

9.6 Invoicing. Upon completion of the initial budget, and thereafter at such other intervals as determined appropriate by the Board, the Agency shall determine the amount of the budget expenses payable during the ensuing period pursuant to each Member Agency’s share of expenses required by this Agreement, and the budget approved by the Board. The Agency shall submit to each Member Agency an invoice showing the Member Agency’s share for the applicable period together with a calculation of the Member Agency’s share. Each Member Agency shall pay to the Agency the amount invoiced within 30 days after the date of the invoice.

Any amount not paid within 60 days of the date of an invoice shall be delinquent.

9.7 Default and Delinquency. Any Member Agency which defaults in its obligation to pay or advance any amounts due pursuant to this Agreement after such amounts have become delinquent shall be deemed to have waived and relinquished any rights and benefits it may have under this Agreement. Any defaulting Member Agency shall be liable to the Agency for interest on the unpaid amount at the rate of 10% per annum, or the maximum rate allowed by law if it is less than 10% per annum, until the overdue invoice amount is paid in full. If the Agreement is terminated, then the defaulting Member Agency shall remain liable for payment of its share of debts, liabilities and obligations under this Agreement incurred prior to the date of termination, plus interest.
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9.8 Accounting. The Agency shall maintain strict accountability of all funds, receipts and expenses, and shall keep and maintain appropriate records and accounts of all funds, receipts and expenses under this Agreement in accordance with generally accepted accounting practices for California public agencies and the requirements of the Act. The Agency shall allow any Member Agency, or any of its employees, accountants, attorneys or agents to review, inspect, copy and audit any such records and accounts.

9.9 Record of Contributions. The Agency shall maintain records of all equipment, property and assets contributed by each Member Agency and by the Agency, including any staff resources contributed to the Agency.

9.10 Audit. The records and accounts of the Agency shall be audited annually by an independent certified public accountant and copies of such audit reports shall be filed with the State and each Member Agency pursuant to the requirements of Section 6505 through 6505.6 of the Government Code. The audit shall conform to generally accepted auditing standards. Such report shall be filed within 12 months after the end of the fiscal year or years under examination, and no later than fifteen (15) days after receipt of such audit reports by the Agency.

9.11 Expenditures. The Board shall establish and comply with a system and procedure for the review and approval of Agency expenditures and claims and the drawing and signing of Agency warrants or checks. All expenditures shall be consistent with the approved budget, except as otherwise determined by the Board.

9.12 Commitment to Use of Agency Services. In order to ensure and maximize the financial success of the Agency, following the Agency’s commencement of providing animal shelter and/or control services, the Member Agencies agree to direct all inquiries and needs for animal shelter and/or control services within their respective jurisdictions to the Agency.

10. Debts, Liabilities, Obligations; Contracts with Public Retirement Systems.

10.1 Subject to all applicable laws, including but not limited to Government Code section 6508.1, all debts, liabilities, and obligations of the Agency shall be those of the Agency, and do not constitute debts, liabilities, or obligations of any one or more of the Member Agencies. The responsibilities and obligations of each Member Agency to this Agreement shall be solely as provided in this Agreement, or as provided in supplemental agreements or amendments as shall be executed by the Member Agencies.

10.2 The Agency shall not contract with a “public retirement system,” as defined in Government Code section 6508.1(b), unless this Agreement is amended to expressly authorize such a contract. If the Parties amend this Agreement to authorize such a contract, such amendment shall address the Parties’ respective responsibilities for the Agency’s retirement liabilities in the event of termination or withdrawal.

10.3 The debts, liabilities and obligations of each Member Agency in existence or accrued as of the full execution of this Agreement shall remain the debts, liabilities and obligations of that Member Agency and shall not be assumed by or transferred to the Agency.

After the execution of this Agreement by both Member Agencies, however, any existing debt, 3257
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liability or obligation of the Member Agencies may be expressly approved or accepted by the Agency by a formal written action of the Board.

11. Indemnity and Hold Harmless; Insurance.

11.1 Indemnification of Member Agencies. The Agency shall indemnify, defend and hold harmless the Board of Directors, the individual Member Agencies, and their members, officers, directors, employees and agents from and against any and all liability, loss, damages, expenses, costs (including, without limitations, costs and fees of litigation or arbitration) of every nature, arising out of any Agency act or omission related to this Agreement, except such loss or damage which was caused by the willful misconduct of the Board of Directors, any individual Member Agency, or their members, officers, directors, employees and agents.

11.2 Indemnification for Prior/Separate Acts. Each Member Agency (Indemnifying Member Agency) shall defend, indemnify and hold harmless the Agency, each Director, the other Member Agency, and the Agency and each Member Agency’s respective Council or governing body members, officers, agents and employees, from any and all claims, losses, damages, costs, injuries and liabilities of every kind, including attorney’s fees and expert’s fees, arising directly or indirectly from the Indemnifying Member Agency’s acts or omissions occurring prior to the effective date of the Agency’s initial Effective Date, or that otherwise occur outside the scope of this Agreement.

11.3 Insurance. The Agency shall acquire insurance protection as is necessary to protect the interests of the Agency and the Member Agencies. The premiums for insurance acquired by the Agency, as well as any anticipated funds necessary to pay for self-insured retentions and deductibles for insurance, shall be determined based upon actuarial studies and included in the budget. Any adjustments to the budget to pay for insurance premiums, selfinsured retentions, and deductibles shall be prepared by staff for presentation to the Board of Directors for consideration and approval.

11.4 Survival. These defense, indemnification, and hold harmless obligations shall survive and continue in full force and effect after withdrawal of any Member Agency from this Agreement or termination of this Agreement for any reason with respect to any acts, errors or omissions that occurred before the date of such withdrawal or termination.

12. Termination.

12.1 Termination.
(a) If there are at any point only two Member Agencies in the Agency, either Member Agency may unilaterally terminate the Agreement with an effective termination date of June 30 of any Fiscal Year, provided that written notice is provided to, and received by, the Agency and the other Member Agency by the terminating Member Agency no later than June 30 of the prior Fiscal Year, as expressed by vote of the governing body of the terminating Member Agency. Any terminating Member Agency shall be obligated to pay that Member Agency’s contributions for the Fiscal Year ending on the effective date of termination. 3258
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(b) The Member Agencies may all jointly agree by written consent to terminate the Agreement, as expressed by resolution of the governing boards of all Member Agencies (passed by vote of the membership of the governing body of each Member Agency).

Such termination shall provide for adequate time to wind-up the affairs of the Agency and distribute any assets pursuant to this Agreement. The Member Agencies shall be obligated to pay their contributions until the effective date of termination.

12.2 Disposition of Member Agencies’ Property Upon Termination. Any property that was acquired by a Member Agency prior to entering this Agreement, and that is required either by this Agreement or by any subsequent act or agreement to remain the property of the Member Agency, shall be returned to the Member Agency upon termination of this Agreement. Exhibit C lists the separate property of the Member Agencies, but a Member Agency may prove that it, and not the Agency, owns certain property by providing documentation establishing such ownership.

If property is not listed in Exhibit C, and no documentation establishes ownership of that property, the property will be presumed to be owned by the Agency.

12.3 Disposition of Agency Property Upon Termination. Upon termination of this Agreement, the assets and property of the Agency shall be distributed as follows:
(a) First, if a Member Agency is in default of its obligation to pay or advance any amounts due to Agency pursuant to this Agreement, then any funds or assets of the defaulting Member Agency shall be applied to the Agency in satisfaction of any such delinquency.
(b) Second, any other funds on hand shall be used to liquidate and wind-up the affairs of the Agency.
(c) Third, any surplus funds on hand remaining after satisfaction of subsections (a) and (b) above shall then be returned to the Member Agencies in proportion to their proportional financial contributions made to the Agency. (d) Fourth, any property acquired by a Member Agency prior to entering this Agreement shall be returned to the Member Agency which owned the property at the Formation Date; provided, however, that if any such property has been substantially improved, repaired or modified by Agency funds, it shall be distributed pursuant to subsection (e) below. (e) Fifth, any property owned by the Agency in which the original Member Agencies or their successors hold an ownership interest pursuant to Section 8.1(a) shall be transferred or returned to such Member Agencies pursuant to a separate agreement of such Member Agencies entered into at that time. If such subsequent agreement is not successfully negotiated and agreed to within a reasonable period of time, then the Member Agency previously owning the property shall have the option, exercisable in its discretion, to purchase the property, in whole or in part, for fair market value at the time of the exercise of the option. Within 90 days notice of exercise of the option, or as soon as reasonably possible thereafter, the Agency shall notify the Member Agency previously owning the property of the Agency’s reasonable determination of the amount of the purchase price of the property, including any improvements thereon. Upon mutual agreement on a purchase price determined under this section and payment 3259
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thereof, the Agency will sell, assign, transfer, convey and deliver to such Member Agency all of its right, title, and interest in the purchased assets, and Agency will pay the other original Member Agencies that had an interest in the property in proportion to their financial and equipment contributions made to the Agency during the operation of this Agreement and any ancillary agreements, including contributions specifically related to ownership interest in the subject property.
(f) Sixth, any remaining property and assets shall be divided and distributed amongst the Member Agencies pursuant to separate agreement of the Member Agencies entered into at that time. If such subsequent agreement is not successfully negotiated and agreed to within a reasonable period of time, then the remaining property and assets shall be sold and the net proceeds from any sale shall be distributed among the Member Agencies in proportion to their financial and equipment contributions made to the Agency during the operation of this Agreement and any ancillary agreements.

13. Conflict Resolution. The Member Agencies agree that any and all disputes, claims or controversies between the Member Agencies arising out of or relating to performance of this Agreement, shall be resolved pursuant to the conflict resolution provisions as follows:

13.1 The Member Agencies shall first meet and attempt in good faith to negotiate and resolve any dispute arising out of or relating to this Agreement, subject to subsequent approval of any such resolution by the respective governing boards. The Member Agencies may, in each Member Agency’s respective discretion, appoint either an alternative representative of the governing body or an ad hoc committee constituting less than a quorum of the governing body to meet and attempt in good faith to negotiate and resolve any dispute arising out of or relating to this Agreement, subject to subsequent approval of any such resolution by the respective governing boards.

13.2 If the matter is not resolved by negotiation pursuant to Section 13.1 above, then the Member Agencies agree that the matter shall be submitted to mediation within a reasonable period of time after receipt of a written request from one Member Agency to the other Member Agency requesting such mediation. The Member Agencies shall cooperate with one another in selecting a mediator and in scheduling the mediation proceedings. Should the Member Agencies be unable to agree upon a mediator, they shall agree upon a mediation service and shall have that service select a mediator for them. The Member Agencies agree that they shall participate in the mediation in good faith and that they will share equally in the costs of mediation. All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the Member Agencies, their agents, employees, experts and attorneys, and by the mediator or any employees of the mediator, are confidential, privileged and inadmissible for any purpose, including impeachment, in any litigation or other proceeding involving the Member Agencies, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation.

13.3 If the matter is not resolved by negotiation pursuant to Section 13.1 above, or by subsequent mediation pursuant to Section 13.2 above, then the Member Agencies may submit the matter to binding or non-binding arbitration, but only if both Member Agencies agree to 3260
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submit the particular controversy to arbitration. Neither Member Agency shall have a right to submit any controversy to arbitration without the other Member Agency’s consent.

14. New Members.

14.1 Addition of New Members. The Board may set the terms and conditions for admitting new members (a “New Member Agency” or “New Member”) that it deems appropriate either by amendment to this Agreement or reference to the Bylaws or other adopted resolution or policy of the Agency. New Members may only be admitted with unanimous approval of the Board and approval by each governing body of the Member Agencies. Approved New Members shall execute a copy of this Agreement, as amended, and shall thereafter be subject to all terms and conditions contained herein.

14.2 Construction. Except as otherwise expressly set forth herein, the terms of this Agreement shall be construed so as to apply to New Members the same as to the initial Member Agencies to the Agreement. New Members shall have the rights and obligations accorded to “Members” or “Member Agencies” (whether singular or plural) under this Agreement.

14.3 Cost Share. Prior to the acceptance of any New Member Agency, the proposed New Member Agency shall pay an amount, as determined by the Board, for the proposed New Member Agency’s fair share of any start-up costs or other initial investments incurred by the Agency as consideration for admitting the New Member Agency.

14.4 Funding of Services. The Agency shall not provide any animal control, animal sheltering, or related services within a New Member Agency’s geographic area unless and until the New Member Agency deposits sufficient funds to cover the estimated costs of services for a period of time as determined by the Board, to be not less than six (6) months.

15. Contracting with Other Agencies.

16.1 Authority to Contract for Services. In accordance with its statutory authority, the Agency may offer its services to nonmember public agencies upon such terms as may be mutually agreed upon by the parties.

16. Withdrawal. Notwithstanding any other provision of this Agreement, any Member Agency may withdraw from the Agency by providing the Agency with written notice of its intent to withdraw consistent with Section 12.1 of this Agreement, Termination. This includes providing written notice no later than June 30 of any Fiscal Year, a continuing obligation to pay that Member Agency’s contributions for following Fiscal Year (the last date of which will be the effective date of termination), and following Section 12.1.b. for the procedure where the Members Agency may jointly agree by written consent on the withdrawal of a Member Agency.

A withdrawal from the Agency constitutes a withdrawal of that Member Agency’s representatives from the Board of Directors.

17. Effect of Withdrawal. The withdrawal of a Member Agency shall not terminate its responsibility to contribute its share of any obligation incurred by the Agency, including amounts determined by the Board for (1) liabilities and claims accrued during the time the agency was a Member Agency; or (2) budgeted expenses for the Fiscal Year in which notice of intent to 3261
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withdraw is effective. Except as the withdrawing Member Agency may agree, in writing, with the Board, the withdrawing Member Agency shall automatically relinquish all rights as a Member Agency under this Agreement, on the effective date of the withdrawal. Upon termination of this Agreement, a Member Agency that has withdrawn will be treated like all other Member Agencies for purposes of disbursement of Agency assets, unless otherwise agreed in writing and the remaining Member Agencies of the Agency can maintain the name “West End Animal Services Agency.”

18. Conflict of Interest Code. The Agency shall adopt a Conflict of Interest Code consistent with the Fair Political Practices Commission’s Model Conflict of Interest Code.

19. General Provisions.

19.1 Integration. This Agreement constitutes the sole, final, complete, exclusive and integrated expression and statement of the terms of this contract among the Member Agencies concerning the subject matter addressed herein, and supersedes all prior negotiations, representations or agreements, either oral or written, that may be related to the subject matter of this Agreement, except those other documents that are expressly referenced in this Agreement.

19.2 Headings. The section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

Ontario City CouncilJuly 16, 2024

Ontario City Council
July 16, 2024